by Stuart Ritter
According to T. Rowe Price’s new survey, children want more guidance on money matters,but their parents are lacking as financial role models. 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 77% of parents don’t always tell their kids the truth about money matters.
As parents, we all know that kids are eager to learn. That’s why it is important to make sure that our actions are helping to put our kids on the right track. Like our parents used to tell us: honesty is the best policy. The best way to set your kids up to have a healthy understanding of money and finances is to be open and honest with them, in addition to acting as a good financial role model and teaching them basic financial skills.
According to the survey, children believe that their parents are good financial role models, however, there is still room for improvement. There are certain steps that every parent can take to ensure that they are meeting their children’s expectations as a good financial role model:
- Take advantage of everyday teachable money moments: These are moments that happen throughout the day which 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 them 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 (let’s say 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 they spend their money on a DVD, they are not going to be able to get their 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 an especially unique experience.
T. Rowe Price collaborated with Walt Disney Parks and Resorts Online to create The Great Piggy Bank Adventure®, a free online game which offers lessons on goal setting, spending vs. saving, inflation and diversification. And for parents who are looking for additional help with their family financial discussions, the T. Rowe Price 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 impactful 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.
About The Author:
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.