Parents tend to tiptoe around the topic of money as if it’s a squeaky toy and their children are napping nearby, but their children would likely be better off if they made some noise. That’s according to a new survey by T. Rowe Price, which found that parents are largely silent, sometimes deceptively so, when it comes to discussing personal finance. About 3 in 4 parents admitted to not being honest with their children about money.
Even if parents try to avoid the topic, says T. Rowe Price financial planner Stuart Ritter, children often pick up on anxiety. “Kids are seeing what’s going on anyway, and without your context around it, they’re going to draw their own conclusions,” he said. He recommends opening the conversation by talking about financial goals and values. “Set a financial goal that’s important for your family,” such as paying for college, he said. When other expenses come up, such as a vacation or a new car, parents can explain the trade-offs.
The survey, which included interviews with 8- to 14-year-olds, suggests that kids want that kind of information. One in five young respondents said they want to know more about saving money, and almost the same proportion said they wanted to learn more about earning. Only half of parents say they talk to their children about savings goals and spending and savings trade-offs.
Many parents avoid talking about money because they don’t want to share how much they make, or even worse, have their children tell their friends. (One in three parents surveyed said they specifically avoid discussion of the family’s financial state.) But Ritter says there’s no need to talk numbers. “You’re not breaking out the W-2 forms but talking about setting goals,” he said.
Financial educator Mary Ann Campbell has found that money attitudes such as “live within your means” are passed on through generations. She concludes that parents should “model the behavior you want (your kids) to have.”
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