New research indicates that over a third of parents (38%) are concerned that their child does not understand the value of money. The survey, conducted by OnePoll for BOK Financial, reveals that almost one-third of parents (29%) believe their child does not receive adequate financial education in school.
A recent survey among 2,000 parents of children aged 5-17 examined the importance of early financial education. The survey found that most parents (82%) believe financial responsibility should begin at home. In fact, they agree that the average age at which money habits begin to form is 15 years old. At 15 years old, teenagers will likely get summer or part-time jobs while in school, and this is often when young adults begin to earn their own money.
Survey respondents agree that parents should teach their kids about the importance of money and how to manage it before they reach their teenage years to avoid difficulties in managing money in adulthood.
Those surveyed believe financial literacy should be taught early in life, and do take some matters into their own hands.
Children's Financial Literacy Is Important
“If we're not intentional about the financial lessons we're teaching our kids, we're leaving things to chance,” says Leasa Melton, consumer product strategy manager at BOK Financial. “Given the importance of financial fitness in a person's long-term well-being, parents can be incredibly influential. Even learning simple budgeting skills helps our kids think, solve problems and develop discipline.”
Jac Arbour, Certified Financial Planner and author of This Little Piggy, says financial literacy provides children with an essential life skill to serve them into adulthood. “As they become more independent and make their own financial decisions, a solid understanding of money management becomes indispensable. Introducing financial concepts early lays the groundwork for informed decision-making, helping children develop responsible spending habits and financial security.”
Arbour adds, “Teaching children about money at a young age cultivates a sense of financial awareness. They learn to differentiate between needs and wants, the value of saving, and the consequences of debt. These lessons pave the way for a lifetime of sound financial choices.”
Financial Education In School Is Lacking
Many surveyed believe that financial literacy and money management skills should be part of the curriculum, as well as taught at home.
Because of the lack of financial education in school, 64% of parents take it upon themselves to teach their youngsters about saving money. The methods used to teach children about finances include starting a money jar or piggy bank (62%) and providing allowances to help with budgeting (56%).
In addition, other parents have taught their children to be savvy shoppers by comparing prices at different stores (57%) and looking for cost-effective options or by having serious financial discussions with them (51%).
Onur Kutlubay, CEO of YouParcel, says the best way to teach financial responsibility is through practical experience. “Give children a small allowance and guide them in dividing it for spending, saving, and sharing. Our family started a “saving jar” for a particular toy. Our children learn patience and goal-setting as they contribute and watch their money grow, fostering a healthy financial mindset.”
Earning Money Teaches Financial Responsibility
Most respondents also believe that having a job during high school is crucial in teaching teenagers about financial responsibility. And in this day and age, young adults have many different ways to earn money.
Half of the survey respondents (51%) said their children earn money by selling items such as crafts, lemonade, or baked goods (63%) or by receiving a weekly allowance (57%).
Surprisingly, 42% of the respondents report that their child is making money monetizing their social media accounts.
Setting A Good Example Is Key
Most parents (82%) also believe that it is crucial to set a good example, and they think children will likely develop similar money habits as their parents in adulthood. Parents are demonstrating good financial habits by ensuring their child has a more financially secure childhood than they did by saving for their future.
However, in practice, parents have less saved for their children than they would like. On average, parents reported having slightly less than $14,000 in savings for each child.
In addition, the survey found that while most parents (56%) have a bank account for their child, 28% do not. Over three-quarters (79%) of parents with a bank account for their child reported that they wish they had set it up earlier in hindsight.
“While there's no hard and fast rule about opening a bank account or teaching your child about money, the earlier, the better,” says Melton. “We can introduce spending, saving, and budgeting to kids at a very young age. Opening a bank account and teaching appropriate money management skills allows your children to ask questions about money and practice their skills in a low-risk environment. These steps help build a solid financial foundation.”
Arnie is the founder and creator of ArnieNicola.com, a website resource for first-time moms about pregnancy and motherhood. She is a CPA and a financial analyst by trade, and writes articles and runs her blog on the side. When she is not working or blogging, you can find her running after her very active toddler.