Money. It's something that wasn't spoken about much in our home growing up. For the most part it was considered rude to broach the subject. The general consensus was that we had enough of it; I was supplied with everything that I needed and most of what I wanted as a child, and that was that.
Fast forward to young adulthood and in all honesty, I didn't have a clue what I was doing and neither did my husband [as he was raised in a similar setting ]. Needless to say, the art of making good financial choices was simply something that we had to learn along the way.
As parents now, we hope to help guide our children to long term financial success and it's never to early to start teaching them. Teachable moments present themselves every day. For example, our children make the bi-weekly trip the grocery store with us. How do they learn from a trip to the grocery store, you ask? They watch me plan my trip to the store with lists, coupons and a budget. We also talk about the price points as we walk through the store and we compare similar products to find the better value . It's so important for them to understand the benefits of saving wherever possible.
There are so many great teachable moments to be found in our daily routines - that can ultimately help to guide our children to long term financial success.
T.Rowe Price Senior Financial Planner, Stuart Ritter is helping parents up their game to help ensure their kids have long term financial success.The
best way to instill good financial values in children is to discuss
monetary topics early and often while planning for both short and
long-term goals. Yet, according to the 2013 Parents, Kids & Money Survey from T. Rowe Price, conversations and actions often focus on short-term needs versus the behaviors needed to achieve success.
T. Rowe Price Senior Financial Planner, Stuart Ritter offers the following tips for parents to use when teaching their kids about money:
- Always begin by setting goals. Talking about saving for a summer vacation is a good place to start, but parents also need to explain the importance of setting long-term goals like saving for a car or even retirement. When kids are told to “save money,” this abstract idea may not resonate as well as parents would hope. Helping kids decide on a specific goal, particularly a long-term goal, provides a real-life incentive for saving money
- Use everyday situations to spark the conversation. Interactions involving money, whether it’s using coupons at the grocery store, balancing a checkbook, or comparison shopping for a new television, are opportunities to teach kids valuable lessons. For example, when your grade-school daughter asks for her own credit card so she, too, can get things at the store for “free,” show her the bill that comes once a month and explain how you pay it out of your earnings.
- Lead by example. The survey revealed that 97% of kids say they learn their money habits from their parents.
- Keep it fun. If your kids roll their eyes when you begin to lecture – one more time – on financial responsibility, your messages probably won’t stick. 75% of kids believe an online game or mobile app would be helpful to learn the basics of saving and spending. That is why T. Rowe Price offers MoneyConfidentKids.com and The Great Piggy Bank Adventure mobile app, for parents to facilitate useful financial discussions with kids. So when parents are in a store and hear the phrase, “I want it” they have a mobile app that can help engage their kids in a discussions about trade-offs.
Key Findings From The 2013 Parents, Kids & Money Survey from T. Rowe Price
- Family Finances and Long Term Financial Topics Are Off the Table: A large majority of parents (73%) report they are having regular conversations with their kids about money, but the conversations revolve around short term financial topics like back-to-school shopping (62%) rather than long-term planning such as family savings goals (38%). Additionally, 14% of parents discourage kids from talking about money altogether.
- Parents Not Covering the Basics Required to Create a Secure Financial Future: Half of parents do not save regularly for retirement (50%), do not maintain emergency fund for unexpected expenses (48%), do not have life insurance (54%) and do not have an up-to-date will (74%).
- Kids Unsure How to Secure a Financial Future: Today’s kids will need well over a million dollars for a secure retirement, but are not realistic about how to get there. Only 21% believe the most likely way to obtain a million dollars is to invest in stocks and bonds, comparatively 24% think the most likely way is to become famous and 32% think the most likely way is to use a savings account.
- College is Important, But Saving For Isn’t: Kids and parents agree that the best way to prepare for a strong financial future is with a good education, but their actions do not support their beliefs. Only 41% of parents are regularly saving for college. In fact, more parents (46%) regularly save for vacation than for college and only 59% have talked to their children about how they will pay for college.
- Kids Following Parents Bad Habits: Kids are spending their money on short-term items, 63% of kids say they spend their money right away on things they were not saving for and/or short-term savings goals. This is following in their parents footsteps, a third of parents (33%) say their biggest financial regret is overextending themselves financially.
- Parents Are Not Being Good Role Models for Long-term Financial Planning. 84% of kids think they will be financially independent from parents between ages 18-25, yet their parents may not be financially independent from them in the coming years. 22% of parents believe their kids will need to support them in retirement
ABOUT STUART RITTER:
Stuart Ritter is a financial planner in T. Rowe Price’s Financial Planning Services Group and a vice president of T. Rowe Price Investment Services, Inc. A father of three young kids, Stuart was one of T. Rowe Price’s primary collaborators with Walt Disney Imagineering and Walt Disney Parks & Resorts Online on the creation of The Great Piggy Bank Adventure®. He is a strong advocate for starting earlier in having money conversations with your children. Additionally, Stuart is a member of the Maryland State Department of Education’s Financial Literacy Education Advisory Council. He currently teaches the “Maybe Baby” financial preparation class for expectant and prospective parents at Howard County General Hospital in Maryland. Stuart has appeared on television and radio programs for networks like ABC News, CNBC, FOX Business, and National Public Radio; and has been quoted extensively by The Wall Street Journal, Money magazine, The New York Times, the Associated Press, Kiplinger’s Personal Finance, SmartMoney.com and many other national news organizations and websites.
Stuart Ritter is a financial planner in T. Rowe Price’s Financial Planning Services Group and a vice president of T. Rowe Price Investment Services, Inc. A father of three young kids, Stuart was one of T. Rowe Price’s primary collaborators with Walt Disney Imagineering and Walt Disney Parks & Resorts Online on the creation of The Great Piggy Bank Adventure®. He is a strong advocate for starting earlier in having money conversations with your children. Additionally, Stuart is a member of the Maryland State Department of Education’s Financial Literacy Education Advisory Council. He currently teaches the “Maybe Baby” financial preparation class for expectant and prospective parents at Howard County General Hospital in Maryland. Stuart has appeared on television and radio programs for networks like ABC News, CNBC, FOX Business, and National Public Radio; and has been quoted extensively by The Wall Street Journal, Money magazine, The New York Times, the Associated Press, Kiplinger’s Personal Finance, SmartMoney.com and many other national news organizations and websites.
T. Rowe Price, in collaboration with Walt Disney Parks and Resorts Online, has created The Great Piggy Bank Adventure, an interactive game to help kids learn how to make the right financial decisions in a fun and entertaining way. The Great Piggy Bank Adventure is available online at www.GreatPiggyBankAdventure.
For more information on how to facilitate useful financial discussions with your children visit www.MoneyConfidentKids.com
