Having the Talk: Kids, Parents and Money
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Having the Talk: Kids, Parents and Money

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Tips for raising money-savvy children from a personal finance instructor.

Tips for raising money-savvy children from a personal finance instructor.

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  • Abigail—”why don’t they just buy money?” story. There are still teens who think that way.
  • Parents are most important when it comes to raising money savvy kids
  • an online survey of parents of children ages 8-14 and their children ages 8-14. A total of 1,008 parents and 837 children ages 8-14 in the U.S. participated; the margin of error is +/- 5.0 percentage points. http://media.moneyconfidentkids.com/wp-content/uploads/2012/03/T_Rowe_Price_PKM_Survey_Results.pdf
  • Relative to other topics important to discuss with their kids, parents actually have an easier time discussing bullying, drugs and smoking than investing and family finances. In fact, talking about investing is just as difficult for parents to talk about as puberty/coming of age. However, only 64% agree they have a good understanding of how to beat inflation or what asset allocation (66%) and diversification (76%) mean
  • Saving (20%) and how to make more money (18%) topped the list of money topics kids want parents to talk about more often. Still, 45% didn’t know or couldn’t name a money topic they wanted parents to talk to them about more often. 54% go to their moms with money questions. 40% go to dads first.
  • Parents and kids agree on which financial concepts parents are teaching their kids. Most parents (72%) indicate they spend most of their time teaching about what it means to spend smartly. However, around half of parents say they are teaching their kids how to set a savings goal (51%) or about the trade-offs between spending and saving (46%), leaving kids with an incomplete long-term financial road map.
  • Responsibility to help others. Tikkunolam. Jewish values
  • Watch the language that you and your children use around “I need this.” Correct them (and yourselves!).
  • Verbalize Trade-offs and priorities“We can’t afford it” shouldn’t become a refrain
  • Give them real-life experience
  • What money messages are you sending your children??
  • $5,500 for 2013 if earn an income. Set up custodial IRA
  • A credit card is essentially taking out a loan. Interest rates as high as 29.9%! FeesSpending money only happens after you earn it. Delayed gratification.Authorized user—start building good credit
  • A credit card is essentially taking out a loan. Interest rates as high as 29.9%! FeesSpending money only happens after you earn it. Delayed gratification.Authorized user—start building good credit
  • Start at age 5-7. 50c to $1 per year of age. (8 year old would get between $4-$8 a week).
  • Slightly more than half (52%) of parents do not give their child an allowance. The most common reasons for not giving an allowance are that parents can’t afford to (26%) and that parents prefer to pay for the items their kids need (22%). Among those who do give allowances, the vast majority (86%) are earned.

Having the Talk: Kids, Parents and Money Having the Talk: Kids, Parents and Money Presentation Transcript

  • Tamar Snyder, Certified Educator in Personal Finance (CEPF)
  • Free money?!
  • Teens lack basic financial literacy skills: • Nearly two-thirds of today’s high school students are financially illiterate • The average high school senior can only answer about half of the questions on a basic financial knowledge test • 77% of teens surveyed believe they are financially savvy, yet only 35% know how to balance a checkbook. 31% understand how credit card interest and fees work. Only 22% of teens surveyed understand how income taxes work (Charles Schwab's 2011 Teens & Money Survey) • Financial literacy is rarely taught at school
  • T.RowePrice Fourth Annual Parents, Kids & Money Survey (2012)
  • T.RowePrice Fourth Annual Parents, Kids & Money Survey (2012)
  • Key Findings: • • • • Teens spend most of their money on “social spending” Savings has become a lost art The concept of “interest” is not fully understood Most teens do not have a written budget, but know they will need to in the future • Teens do not like asking their parents for money • While many teens have credit cards, few have seen a credit card statement. They were shocked to see how long it would take to pay off credit card balance if they only paid the minimum balance • They enjoyed learning about stocks and investing
  • tips for raising money savvy kids of all ages
  • Which money messages are YOU instilling in your children?
  • Tzedaka as a tool for discussing wealth and privilege
  • Explain how much things cost
  • Step 1: Calculate total income ($50) Step 2: Set aside 10% for tzedaka ($5) Set aside 10% for savings ($5) Set aside 10% for investing ($5) You are left with 70% ($35) for spending
  • The joys of compound interest
  • • Roth IRAs • Entrepreneurship
  • Credit vs. Debit
  • Questions? www.tamarsnyder.com tamar@tamarsnyder.com
  • Allowances: Good idea or bad idea?