Having a money talk with your children can pay off handsomely when they reach adulthood by delivering a higher level of confidence in their finances. The “birds & bees” talk may help prevent unplanned pregnancies, but the “dollars & cents” talk, or more correctly, “dollars & sense” talk, may avoid boomerang adult kids who move back home in financial distress.
While the extensive financial literacy programs and initiatives, produced and funded by large financial firms, including payment giants like Visa, have produced good results over the past decade, the real education begins at home.
FinEd Begins at Home Mostly With Moms
A new survey from Quicken found children who were taught early about money are three times as likely to have a personal annual income of $75k or higher than the untaught. Four out of ten reported a high level of confidence in their finances as a result of the “dollars & sense” talk.
Young adults say they learned the most about handling finances from mom, and almost twice as many people say their mom had a positive impact on their future financial health than say dad did.
Quicken also discovered when asked what financial lessons they wish their parents taught them when they were kids, 31% ranked investing in the number one spot on their wish list, but only 11% said they were teaching their own kids about investing. Additionally, the survey showed six out of ten of the people who do not use any personal finance tools also reported a lack of confidence in their current financial situation.
If parents are struggling to pay bills each month or arguing about money on a regular basis, little ones will notice. Children are always watching, even when you don’t realize it. If you’re an example of financial responsibility, your kiddos will be more likely to follow.
A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. An early start is key to setting your kids on the path to a healthy financial future.
Graduates Handle Money Better
Meanwhile, another study found college graduates are the most confident, with 71% rating their money management skills as good or excellent, while 59% of college students rate themselves the same way. Forty-two percent of those who did not complete college rate their skills as good or excellent.
Ninety-one percent of college graduates, 84% of non-completers, and 72% of college students pay their bills on time, and more than half of each group say they track their spending and never spend more than they have. Sixty-two percent of college graduates, and half of college students and non-completers are saving money every month. Forty-one percent of college graduates say they have an emergency fund, compared to 22% of college students and 31% of non-completers.
The Sallie Mae and Ipsos “Majoring in Money 2019” report also found when it comes to paying for purchases, debit cards are nearly universal, and are the most frequently used payment method. While 81% of young adults still carry cash, 89% of college graduates and 91% of non-completers and 85% of college students use debit cards. Eighty-eight percent of college graduates, 86% of students and 78% of non-completers use mobile payments, most often citing PayPal and Venmo.
Grandparents – Step Up to the Plate
Robert McKinley, father of six adult children and grandfather of 10, notes many families simply do not have the time to discuss dollars and sense with their kids, whether the family is financially struggling or lavishly spending. McKinley, who also serves as pro bono Senior Analyst of CardTrak, CardFlash and CardData, says “it’s never too late for grandparents to step in to share their financial life lessons, to share their two-cents, offering not only financial advice, but more importantly, financial wisdom.”