Does Father Know Best

As Father’s Day approaches, many dads begin reflecting on the life skills they’re teaching their children.  Nice manners, discipline and a good work ethic top many lists.  Not to be overlooked, however, are financial skills, because regardless of whether they are taught formally or by example, parents pass along their financial habits to their children. 

This concept is confirmed by the National Foundation for Credit Counseling’s (NFCC) 2011 Financial Literacy Survey in which the majority of respondents, 42 percent, indicated that they learned the most about personal finance from their parents.  At first glance, this appears to be a good thing, as the home should be the ideal place for children to learn skills and habits.

However, the same survey also revealed that 41 percent of adults gave themselves a grade of C, D or F regarding their knowledge of personal finance.  This is a disturbing decline in financial literacy, as one short year ago “only” 34 percent of Americans gave themselves a low grade.  Further, five percent of U.S. adults, or about 11.5 million people, indicated that the failing grade of F best represented them, marking a sharp increase from previous years when less than three percent of adults self-identified at this level.

Taken together, these results suggest that many parents are ill-prepared to teach their children sound financial principles.   

The good news is that Americans recognize and are willing to admit their financial deficiencies.  Now it is up to them to do something about it, particularly if they have children who will invariably model their parent’s financial behavior. 

Thankfully, there are many resources available to consumers desiring to improve their level of proficiency in personal finance, including self-help books, the media, the Internet or financial professionals.  Interestingly, the survey showed that while Caucasian and Hispanic adults are more likely to identify the home as the primary learning ground for personal finance, African-Americans are more than twice as likely as Caucasians to garner such information from self-help books, the media or friends. 

Looking at gender, men were more than four times as likely as women to give themselves failing grades for their knowledge of personal finance, eight percent versus two percent, respectively. 

This post was provided by the National Foundation for Credit Counseling (NFCC). The NFCC is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior and build capacity for its Members to deliver the highest quality financial education and counseling services. NFCC Members annually help over three million consumers.  Money Management International is a member of the NFCC.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.