COUNTRY Financial Security Index
Father’s Day Finance: Americans Doubt Parents’ Ability to Talk Money
This Father’s Day, consider how your kids are learning to manage money. According to the latest COUNTRY Financial Security Index, 82 percent of Americans feel parents should bear the responsibility of teaching their children about money matters.
Yet, Americans aren’t confident in the ability of parents to successfully teach their kids fiscal responsibility.
- More than half of Americans (55 percent) feel parents are doing a below average job of passing along financial lessons to the next generation.
- That lack of confidence may be causing some parents to avoid the conversation entirely.
- Just forty-five percent of those surveyed said parents are the main source of financial lessons, with moms doing a slightly better job at educating, particularly for their daughters.
- Thirty-six percent of Americans say they taught themselves the majority of financial lessons.
Lessons that matter most
Americans are in agreement that teaching kids about money is important, but they’re divided on when parents should stop supporting their children financially. Thirty-one percent believe parents should stop supporting their children when they get their first full-time job, whereas 24 percent think kids should be on their own sooner, when they graduate college or technical school.
“While Americans’ opinion of when a young adult should become financially independent may differ, most agree kids should start learning the basics of personal finance early ,” said Joe Buhrmann, manager of Financial Security Field Support at COUNTRY Financial. “The responsibility to help your kids become financially literate can feel like an overwhelming one for many, but it doesn’t have to be.”
For fathers (and mothers) who are unsure of where or how to begin these conversations, COUNTRY Financial provides tips for teaching youngsters to spend, save and plan effectively:
1. Half of Americans (50 percent) think living within one’s means is the most important financial lesson to teach children. Show your kids the difference between “needs” vs. “wants” by using real world examples. Explain the concept of sacrificing wants, like a new toy, to buy needs, like school supplies. Lead by example, and explain your own “wants” vs. “needs” choices to your children to help them understand.
2. Developing a budget is the first step to maintaining controlled spending habits. Despite that, only 19 percent of respondents listed budgeting as the most important financial lesson. Any kid can learn to budget their money. Buhrmann suggests a 50-40-10 system – for each allowance or birthday dollar received, encourage them to save 50 percent, spend 40 percent and donate 10 percent. This concept helps kids understand the importance of categorizing money.
3. When your child wants a pricier item, encourage them to set up a savings account to help pay for it. Making weekly or monthly contributions to reach their goal can teach the value of delayed gratification and the value of saving.
4. To teach strong saving habits, have children allocate an amount of their allowance or earnings to a savings account each month. You can also consider matching your child’s contributions, similar to the process of a 401(k). These actions teach the benefits of compound interest and the importance of saving.
“Children follow by example, show them how you work to maintain financial security,” said Buhrmann. “Start with the basics -- showing them how you create a financial plan, and how it includes items such as income and expenses, and saving for the future. Talk to them about why having a plan and being prepared is important to you, and how it benefits the family more broadly.”
The COUNTRY Financial Security Index®
Since 2007, the COUNTRY Financial Security Index has measured Americans’ sentiments of their personal financial security. The Index also delves deeper into individual personal finance topics to better inform Americans about the issues impacting their finances. Blog posts and infographics are available at www.countryfinancialsecurityblog.com and on Twitter at @FinanceSecure.
The COUNTRY Financial Security Index was created by COUNTRY Financial and is compiled by GfK, an independent research firm. Surveys were conducted using GfK’s KnowledgePanel®, a national, probability-based panel designed to be representative of the general population and includes responses from approximately 1,000 U.S. adults for national surveys. The margin of sampling error for a survey based on this many interviews is approximately +/- 3 percentage points with a 95 percent level of confidence.
About COUNTRY Financial
The COUNTRY Financial group (www.countryfinancial.com) serves about one million households and businesses throughout the United States. It offers a full range of financial products and services from auto, home, business and life insurance to retirement planning services, investment management and annuities.