By Stuart Ritter on April 30, 2012
According to T. Rowe Price's new survey, children would like more guidance on money matters from their parents. The 2012 Parents, Kids and Money Survey uncovered that kids ages 8-14 are particularly interested in learning more about saving and how to make money. The survey also revealed that although children believe that their parents are good financial role models, 77% of parents are uncomfortable talking about finances with their kids and don't always tell them the truth about money matters.
To overcome any anxiety parents may feel, there are certain steps they can take to ensure they are meeting their children's expectations as good financial role models:
- Take advantage of everyday teachable money moments: These are moments that happen throughout the day that present you with an opportunity to teach your kids about money. An example could be attending a sporting event. When your child has $10.00 and can either buy a souvenir or a hot dog and a soda, that is a great time to teach him or her about trade-offs.
- Set a good example: Children learn their money habits by observing how their parents use, talk about and interact with money. It is important for us as parents to demonstrate good financial behaviors to reinforce what we are teaching our kids.
- Help your kids set specific savings goals: By helping your children set specific savings goals (for example, a new bike) they will learn to tie their spending decisions to that actual goal. Since a purchase's importance needs to be determined relative to another purchase, your child will learn that if he or she spends his or her money on a DVD, he or she is not going to be able to get the bike as soon as planned.
- Don't be afraid to talk openly about finances: You don't need to necessarily tell your children how much money you make, but the more open you are about your family finances, the more your child will understand that the topic of money is not taboo.
- Learn with your child: Your children love to learn, and fun activities where you can learn with your child are especially unique experiences.
Since T. Rowe Price recognizes the importance of parents and kids understanding and discussing basic financial concepts, we've collaborated with Walt Disney Parks and Resorts Online to create The Great Piggy Bank Adventure®, a free online game that offers lessons on goal setting, spending versus saving, inflation, and diversification. And for parents who are looking for additional help with their family financial discussions, the Family Center Facebook Page offers tips, tools, and resources to get parents on the right track.
While having discussions with your kids about money is extremely important, it is also necessary to ensure you are prepared to have effective discussions. When you pair your family financial conversations with strong financial behaviors that your children can observe, you are helping your children to have a healthy understanding of this important topic.
Stuart Ritter, CFP®, is a T. Rowe Price senior financial planner and expert in family financial education. He is a father of three young kids.
T. Rowe Price and Disney Enterprises, Inc. are not affiliated companies.