March (Newstream) -- A recent online survey by Northwestern Mutual reveals many contradictions in how parents teach their kids about money. The nationwide survey shows that:
- Most parents believe that children should start learning the ABC's of money management before they start kindergarten.
- But almost half of parents feel they don't set a good example for their children when it comes to handling money. An equal number believe they miss the mark in discussing more advanced financial topics with their children.
- Parents also view kids as feeling "entitled" to have whatever it is they want whenever they want it.
"Parents have the power to foster positive money management discussions with their children today that can make them healthy financial decision-makers tomorrow," said Deanna Tillisch, who has directed Northwestern Mutual's research in behavioral economics in this series of studies beginning in 2000. "We believe it is our responsibility to give our clients the tools to accomplish that."
Working with Dr. Mark Schug, Professor and Director of the University of Wisconsin-Milwaukee Center for Economic Education, Northwestern Mutual is using this research to better understand the important dynamic between parents' and kids' financial discussion and behavior.
Teaching The ABC's of Money
According to the Northwestern Mutual survey, the idea of earning, saving and budgeting money is a subject that the majority of parents have discussed with their children.
Saving versus spending was talked about in 57 percent of homes, and, the survey found, the concept of saving seems to stick early. All children between the ages of 5 and 7 had piggy banks, and even 60 percent of high school kids had one. Not surprisingly, the percentage of kids with savings accounts increases with age. By age 8, almost 50 percent of kids have an account and the number increases to 71 percent for those in high school.
"I am pleasantly surprised that so many parents seem interested in getting kids off to a good financial start," Schug said. "The concept of sacrificing today to enhance a future goal is an important one to instill in children."
Poor Role Models Dealing with Their Own Financial Insecurities
"It is almost certainly lack of confidence with their own financial management skills that keeps parents from discussing some of the more complex, and key, money issues with their children," Schug noted. Fewer than 40 percent of parents said they talked about credit cards, loans and debt, and their own family finances with their kids. Even less talked with their children about how to invest their money.
When asked why each topic was not raised for family discussion, most responded that they "didn't think of it" or they felt their children were too young. At the top of the list as to why parents failed to talk about individual family finances with their children was, "children have no business knowing this."
According to Schug, "Parents may be concerned that disclosing the income side of the family finance equation leaves them open to lobbying from their children for a bigger allowance. The wiser approach is to help children develop skills for managing their own money, so they have a true sense of what each dollar is worth."
Part 2: Resources For Parents