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T. Rowe Price recently released a new survey that revealed some surprising factoids. The 2012 Parents, Kids and Money Survey revealed that kids age 8 to 14, who tend to listen to their parents on few other topics, would actually appreciate more advice on money matters from mom and dad.
Not only are they interested in getting more parental guidance on saving and making money, but they actually believe their parents are good role models.
Well, knock me over with a feather!
Other parts of the survey, however, are perfectly intuitive. For one thing, 77 percent of parents are not comfortable talking finances with their kids. Also, parents don’t always tell their children the truth about money matters.
Given the mess that many American adults have made of their household finances, it seems fairly understandable that they’re reluctant to share details of their financial fumbling with their offspring. What would be the natural outgrowth of such an attitude? Well, a bit of obfuscation, of course!
Were parents to tip their hands about their own money mistakes, they’d lose that good role model status faster than you could say “unsecured debt.”
T. Rowe Price suggests parents surmount their anxieties by taking a few steps to make sure they meet their kids’ expectations as good financial role models. Here are a few of the steps, followed by my own additional suggestions.
Take advantage of everyday teachable moments
“There are moments that happen throughout the day that present you with an opportunity to teach your kids about money,” the T. Rowe Price survey authors write. “An example could be attending a sporting event. When your child has $10 and can either buy a souvenir or a hot dog and a soda, that is a great time to teach him or her about tradeoffs.”
I’ll add this: If your child has already watched you guzzle a couple of $8 beers and inhale three $5.50 brats, you also have a chance to teach spending restraint by taking a pass on that $14 giant-sized plate of nachos with cheese. Junior should learn early that some belt-tightening measures can actually result in a tighter belt.
Set a good example
“Children learn their money habits by observing how their parents use, talk about and interact with money,” the survey authors report. “It is important for us as parents to demonstrate good financial behaviors to reinforce what we are teaching our kids.”
A very good point, and one illustrated by any number of great examples. For instance, in these days of near-record gas prices, you can impress your children with your wise spending by downsizing from a gargantuan full-sized Hummer to a merely mammoth Chevy Suburban or Ford Excursion.
Next, when the light turns from red to green, show off a bit more monetary wisdom by lightening up that leaden right foot of yours. Imagine the hero worship in your children’s eyes when you begin taking that house-sized vehicle from zero to 60 in a full 15 seconds, as opposed to your customary 10.
Help your kids set specific savings goals
The T. Rowe Price survey authors write: “By helping your children set specific savings goals (for example, a new bike), they will learn to tie their spending decisions to that actual goal. Since a purchase’s importance needs to be determined relative to another purchase, your child will learn that if he or she spends his or her money on a DVD, he or she is not going to be able to get the bike as soon as planned.”
That’s excellent advice, and it can be illustrated by citing a phenomenon currently impacting millions of grown-ups. Simply tell your kids that when adults spend their working years investing in shopping sprees rather than retirement savings plans, they don’t get their retirements until, oh, right around their 95th birthday.
Don’t be afraid to talk opening about finances
“You don’t need to necessarily tell your children how much money you make,” the survey authors advise. “But the more open you are about your family finances, the more your child will understand that the topic of money is not taboo.”
I agree completely. And sometimes, the most helpful revelations you can provide your children are insights into investments you’ve made that haven’t quite panned out. So don’t be hesitant about relating your decisions over the years to invest in 8-track and Betamax tapes, and a boatload of shares in Enron.
These eye-openers may help your children avoid the temptation to invest in the IPOs of social media entities priced at 50 percent more than they are subsequently shown to be worth, or in timeshares situated in hurricane- and earthquake-prone countries overripe for political coups.
Learn with your child
Your children love to learn, those behind the T. Rowe Price survey tell us, adding, “Fun activities where you can learn with your child are especially unique experiences.”
T. Rowe Price has collaborated with Walt Disney Parks and Resorts Online to create “The Great Piggy Bank Adventure,” a free online game offering lessons on goal setting, spending versus saving, inflation and diversification.
I highly recommend taking part, and playing the game often with your children. Doing so may help you avoid being forced to play other kinds of games, such as the fun-filled activity called the Hobo Game.
In this family contest, played after financial foibles lead to repossession of your car and home, you and the kids compete to collect spare change, while residing in a warren of empty Kenmore boxes beneath a highway overpass.
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