I don’t remember my parents talking to me about money when I was growing up. I do have a clear memory of one family gathering – I must have been about 10 years old – and hearing my Uncle Peter joke that he’d be showing his daughter all the household bills when she was older. This was when my cousin was just a newborn. Funnily enough, this sounded interesting to me but it didn’t occur to me to talk to Mom and Dad about it later.
Parents The Biggest Influencers When It Comes To Money
This memory came back to me as I heard a story on NPR yesterday. It covered research which shows that college students who came from families that had included them in discussions about money and budgets are much more likely to make responsible financial decisions as they approached graduation.
“We found that parents played a really big role in the kinds of behaviors that their children exhibited,” said Joyce Serido, a researcher at the University of Arizona, Tucson. “So, those kids who said they spoke with their parents about financial matters actually performed more responsible financial behaviors.”
Everything I’ve read says that parental influence declines as kids get older and peer influence becomes the biggest force in their lives. Yet this research found that, when it comes to finances, parents’ influence is 1.5 times greater than that of financial education and more than twice that of friends.
Financial Education Snowballs
The researchers have been following the young adults in the study since 2007. In this latest round, they’ve realized that there is a snowball effect to financial education.
If you get some financial education early in life, that increases your knowledge which then influences your behavior. You’re already a little bit ahead of the pack. Add in another round of education down the track – maybe you read a finance book or attend a financial seminar – and the effect in both knowledge and behavior is augmented. Increase your financial smarts again and you start to see a dramatic difference between you and people who have not been exposed to financial education.
Let’s Talk About It
So, what can parents take away from this? Here’s the advice from the report:
We have repeatedly found that parents play an important role in preparing their children to be financially self-sufficient, and that their influence continues after their children leave home through conversations and communicated expectations. Children learn about money matters from their parents. Parents can encourage young people to continually seek out new information, coach them in evaluating sources of information, and provide concrete advice and examples to guide them.
Some ideas that we’ll be experimenting with:
- When it comes time to buy a new car, we’ll involve T and M in the process. We’ll talk about our budget, how we research our options and how we negotiate.
- It’s time to sit down and show the boys the household bills!
- I’ll keep bringing home books from the library that introduce them to different money concepts
- Keep educating ourselves about finances
Have you shared your household bills with your kids? What kind of money conversations did you have with your parents?