Learning how to manage money effectively is an essential life skill—but one that many parents struggle to teach their children.
A survey by T. Rowe Price found that although a majority of parents strive to set a good example for their children when it comes to money, their behavior doesn’t always match their ideals. Many parents lack the financial know-how they need to pass on in the first place. And if they don’t know how to handle their own money, it’s unlikely that they will be able to teach their kids effective lessons about finances.
I don’t want to talk about it
In order to teach kids about money, it’s necessary to actually have a conversation about it. But 74% of parents said they are reluctant to talk to their children about money. The reason most often cited was that they did not want their kids to worry about finances.
Another reason parents are reluctant to discuss money might be that they don’t want to admit to their own bad behavior. Thirty percent of parents said that they’ve resorted to borrowing money from their kids’ piggy banks in a pinch. And 48% bribe their kids with money to get them to behave better. Another 22% self-identified as savers, but admitted to carrying a credit card balance from month to month most of the time.
Who teaches kids about money?
Even given those questionable habits, 69% of parents responded that they were concerned about setting a good financial example for their children. They may not know how though. Twenty-eight percent of parents said that since they weren’t good with money, they shouldn’t be the ones to teach their kids about financial matters. And 87% felt that school was the appropriate place for kids to get their financial education.
When they have questions about money, kids tend to turn to mom before anyone else. Fifty-eight percent sought out their mothers. But managing household finances is actually a job that both parents often share even if they don’t know it, according to the survey. Sixty-six percent of moms said they are primarily responsible for household finances, while 70% of dads felt they were the ones in charge.
Passing on knowledge
Out of a group who said their parents did a good job teaching them about money, 73% felt confident in their knowledge of personal finances. Those whose parents didn’t teach them about money were not as likely to feel confident about their financial know-how: only 44% felt they were knowledgeable on the topic.
The sixth annual T. Rowe Price Parents, Kids and Money Survey was conducted in January 2014 among a sample of 1,000 parents of children ages eight through 14.