By Deanna C. White
Today's parents may be willing to talk to their children about subjects like healthy eating, the dangers of drugs and alcohol, and the importance of good grades and good manners, but the topic lowest on their radar, according to a national telephone survey conducted for the American Institute of CPAs (AICPA) by Harris Interactive, is good money management strategies.
Even in today’s dire economic environment, the study found money is among the lowest priorities in conversations between parents and their children.
According to the survey, parents are more likely to have talked with their children about:
- The importance of good manners - 95 percent
- The benefit of good eating habits - 87 percent
- The importance of getting good grades - 87 percent,
- The dangers of drugs and alcohol - 84 percent
- The risks of smoking - 82 percent
Talking about the value of money and managing it wisely came in sixth, at 81 percent.
Children, on average, are ten years old when their mother or father (more often their mother) has the first financial conversation with them about money, according to the survey.
The findings come as Federal Reserve Chairman Ben Bernanke earlier this month stressed the importance of early financial education for "not only individual well-being, but also for the economic health of our nation."
"Based on our findings, parents seem more concerned about the politeness of their children than their financial fitness", said Ernie Almonte, CPA, vice chair of the AICPA's National CPA Financial Literacy Commission. "Dollars and cents should get the same attention as please and thank you at home. Financial education builds critical skills that help put life goals within reach and strengthen the economy. Parents must make financial lessons a priority in both conversation and action as early as possible."
According to the survey, parents consider themselves equipped to teach their children: 67 percent said they strongly agree they know enough about personal finance to teach their children good habits.
"As important as teaching your kids about money is making sure you're teaching them the right lessons", Almonte continued. "It never hurts to brush up on the basics. It isn't uncommon in my work as a CPA to come across financial misunderstandings that people have held on to for decades."
It's a sentiment Brian Greenberg, CPA, of Brian Greenberg & Associates in Marlton, New Jersey, says he can identify with: "Many parents may be reluctant to talk money with their children because they themselves lack a basic understanding of money management. As a result, there are a lot of people loaded with debt today, which will be a burden for many years to come. We need to answer the question of who will teach the teacher."
Joe Cane, partner, Porte Brown LLC of Elk Grove Village, Illinois, and father of four, agrees it's critical to model good financial lessons for children. "A great concept to teach children is the miracle of compounding - earning interest on interest", Cane said. "Even when interest rates are at record lows, the earlier we learn financial lessons, the better we are in the long run."
The National Financial Literacy Commission offers these tips for parents:
- As soon as children are able to express a want, it's time to discuss basic ideas, like the idea of delayed gratification, which underpins the concept of budgeting and saving toward a goal.
- Require children to save a portion of birthday cash and, for older children, any money earned in after-school jobs.
- Give children small jobs to earn an allowance to pay for toys or other wants.
- Make saving fun. Give children the grocery list and have them clip coupons and comparison shop for lower prices by reviewing store flyers. Split the savings with them to create a reward for the effort.
- Speak in terms children can understand.
- At a young age, children may not care about money for college and are more likely interested in money to buy a game or a bike or to have funds for a night out with friends. Create teachable moments around those things your children genuinely care about.
- Three in ten parents never talk to their kids about money or have had only one big talk. Only 13 percent of parents talk with their children daily about financial matters, according to the survey results. The more you discuss good financial habits, the more likely your children are to make those habits part of their daily lives as they get older.
- During dinner, talk about saving for a big purchase, such as a family vacation, and then discuss how significant expenditures might impact the family budget.
- Don't be afraid to show children your pay stub; use it as a vehicle to talk with them about taxes and saving for retirement.
- Review their savings account and college account statements with them.
Walk the Talk
- No matter what a parent says to children about money, their actions are even more important.
- Stick to principles of delayed gratification and don't show mixed signals by lamenting a lack of money then blowing your own budget on whims like going out to eat.