Parents Are Giving Early Money Lessons to Their Kids — Here’s Why You Should Too
Gen X and Millennial Parents
A Study recently released by Capital Group revealed that parents nowadays are having talks with their kids who are twelve years or even younger about the fundamentals of personal finances. These parents are teaching their children about how to make a budget, how to start saving early and how to save for college.
As noted by the senior vice Vice President of Capital Group, Heather Lord, most of the Americans surveyed expressed that they wished someone had given them financial advice earlier than they got it. Lord noted that the wish could be the reason why Gen X and Millenial parents are now giving their children early financial advice. While 39% of the millennial parents expressed that they would begin telling their children to start saving early as early as at the age of 12 or even younger. This is almost twice as much as the level of baby boomers which was 22%
The study further showed that by the time when the children had gotten to their teen years, their parents began to teach them other topics such as good credit, how to use credit cards and avoid debt and buy a car.
The survey was on about 1,202 adults who were within the age range of 21 to 71. Majority of them said they wished they had the opportunity to have learned more about specific personal finance issues when they were much younger. Some of the specific topics include advice for debt-related matters, credit card use, living within one’s means, retirement planning, 401(k) tips and advice on the workings of the stock market and also how to invest.
The survey further showed that about 79% of fathers indicated that they were the significant investment makers of the decision in their families. Mothers, on the other hand, are the ones taking the initiative on matters dealing with the education of their children about finances.
The percentage of respondents who were members of financially unstable homed when they were growing up tended to have more conversations about finance-related topics and more about budget making and settling loans.
Majority of the parents, roughly about 69% of them, believed that they have been considerably successful in teaching their children about their finances. 19% of them expressed that they feel they have been entirely successful. 8% of the parents surveyed stated that they have not achieved considerable success while 3% statedl they have achieved no success at all
The respondents of the survey stated that while educating the coming generation about finances, the schools, parents and the financial advisors should take the pioneering roles.
Most of the parents also believed that part of the highly crucial money matter teachings include starting early and regular saving, living within one’s means, taking advantage of the match of your employers 401(k). Also on the list was creating a budget and putting income percentage into consideration and also avoiding having to carry a credit card balance.
Lessons Based on Age Range
Specific ages have been suggested for parents to begin having decisions about finances with their children and with corresponding topics for this age range:
Majority of children who are 12 years and younger are beginning to learn about the basic concepts such as early savings, college savings, and budget making. In addition, majority of the parents also have discussions with their teens about things like buying a car, making a budget, having good credit and using credit cards. For children in their twenties, the topics that come up include buying a home, renting an apartment and getting insurance.
The survey also highlighted that teaching children about money can be quite a long process. Roughly 40% of parents noted that they were still in the process of educating their children about money matters with the inclusion of 28% baby boomers. For some, teaching children about finances can be a lifelong process and it’s better to have more dialogue than less.
Lord conclusively noted that there are diverse ways to approach giving children money lessons and also several online resources highlighting the various approaches one can take.
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