In a recent survey by mutual fund company T. Rowe Price, parents are more comfortable talking with their kids about bullying and drugs than finances. Unfortunately, this is because many parents do not feel that they are qualified to hand out financial advice, even to their own kids.
Children are very willing to learn, and generally understand that this will help them later in life, but many parents are afraid, perhaps because of the troubles they have had with money in the past (or even the present).
This is a travesty, because any practical examples given, even negative ones, can be a learning experience for children.
In a survey done by mutual fund company T. Rowe Price, children between eight and 14 grade their parents at a B-plus as role models in finances. this is a surprisingly high grade, considering only half of parents set aside money to save on a regular basis, only 24% take steps toward diverse investments, and only 43% actually set financial goals. To be frank, parents are doing a terrible job being role models.
In fact, the survey, Parents, Kids and Money, shows that 77% of parents admit they are not always honest with their kids about money; 15% even lie weekly. Only half of them are okay with talking about saving and spending issues.
According to Time , the following 5 points should be followed by parents to make them the best financial role models for their kids:
- “Take advantage of teachable moments Trips to the grocery store, attending a sporting event, getting money from the ATM, and planning family vacations are just a few examples of opportunities to discuss financial choices and lessons.
- Set an example Demonstrate good financial habits through your own behavior. Try to avoid impulse spending and pay your credit cards in full each month.
- Set specific savings goals Help your kids set short- and long-term goals that provide an incentive to save. This will also help them make smarter spending decisions.
- Don’t be afraid to talk about money You don’t have to reveal everything about your finances. But talking openly will make it more likely that your kids will learn—and help you and your kids get over the money-talk taboo.
- Learn with your child Parents may find concepts like inflation, diversification, and asset allocation difficult to grasp. Why not explore them in ways that can be easily shared? For example, in talking about a diversified portfolio you might equate it to a diversified wardrobe. In both cases, you want enough sizes and styles to be ready for anything.”
In other sad statistics the survey showed, 59% are more likely to believe that there are aliens than that Social Security will still be there when their kids retire.
So, calling all parents, what are you going to do to teach your kids about money?
[Image from Timeout Kids]
