Mom and Dad know a lot of stuff. When you’re growing up, they’re basically your go-to source for answers to your questions about life, the universe, and everything. (Unless kids ask Google all their questions now, which seems entirely possible.)
There’s one area, however, where we don’t think of Mom and Dad as natural-born experts: money.
According to a recent survey conducted by the National Foundation for Credit Counseling (NFCC), when asked where they would go for financial advice, 64 percent of respondents said that they wouldn’t go to their parents because they could get better financial advice elsewhere.
That seems like a significantly large number. Your parents have been there. Done that. They should be your go-to source. But when it comes to money, they aren’t. Why is that?
There are probably a lot of reasons and they likely vary from person to person. However, it’s probably not incorrect to assume that there are some reoccurring themes.
- You aren’t comfortable talking about money with your parents. A 2013 survey conducted by T. Rowe Price found that over a third of all parents admit to not talking to their children at all about finances. If parents aren’t discussing money with their children it’s inevitable that money won’t be a topic either party feels comfortable discussing.
- When parents do talk about money, they talk about the wrong things. That same T. Rowe Price survey also found that parents were much more likely to talk about things specific to their child’s personal economic impact (like back-to-school shopping) rather than less specific, family-centered topics (like setting family savings goals). Children surveyed expressed a desire to be taught more about banking, credit cards, and how to manage money.
- Parents don’t lead by example. Of parents surveyed, 50 percent admitted to not saving for retirement, while 60 percent admitted to not having any savings goals at all. Which isn’t to say that parents need to be perfect, but more that “do as I say, not as I do” is never a promising educational credo.
The lesson here is that parents often do have solid financial advice to give – advice earned through their own (sometimes difficult) experiences with money. The problem is that those channels of communication haven’t been properly opened. That’s why it’s so important to bring children into the financial conversation from an early age. It helps them understand how and why decisions are made. It also makes money an everyday topic – something they feel comfortable talking about, in good times and in bad.
More than just open communication though, parents should feel comfortable owning what they don’t know about money. It’s okay to not know things. Pretty much all of us don’t know things – a lot of things. How you handle those information gaps, however, can make a huge difference. Find the answers together. Make that learning a joyful process. Teach your children that everything you don’t know is simply an exciting opportunity to learn something new.
Parents don’t have to be bottom-less founts of financial knowledge, but they should strive to be open communicators and good examples. Sharing what you know and being willing to learn more are all you need to do to set your children on their own path towards financial excellence.