We can lecture our kids, coach our kids, get tutors for our kids---all of which might have an impact. But as any experienced parent knows, when it comes to teaching kids about many subjects, more is often caught than taught. I was reminded of that point while reading the results of a new survey by T. Rowe Price in which 1,000 parents of kids ages 8 to 14, and over 900 kids in that age range, were asked a variety of questions about money. Among the findings from the company's latest Parents, Kids & Money Survey:
  • While 69% of parents are very or extremely concerned about setting a good financial example for their kids, 74% have some reluctance to discussing financial topics with their kids. The most frequently cited reasons were that they "don't want them worry about financial matters" and their kids are "too young to understand."
  • Perhaps some parents' reluctance to talk about money is due to their own lack of confidence around money since 33% said they are not at all, not very, or just somewhat knowledgeable about managing personal finances. Not surprisingly, even more (65%) said the same about their knowledge of investing.
  • That lack of financial knowledge has an impact on behavior, with 28% of parents assessing themselves as "not good with money," leaving them to conclude: "I don't think I should be the one teaching my kids about financial matters."
  • 44% of parents said they carry over a balance on a credit card either almost every month (25%) or one or two months per year (19%).
  • 28% of parents acknowledged sometimes lying to their kids about money.
This survey also reminds me of research done by the JumpStart Coalition for Personal Financial Literacy. The group used to conduct national tests of the financial literacy of high school and college students. Its most recent test, in 2008, determined less than half of U.S. high school students were financially literate. Somewhat surprisingly, the group also found that students who take a personal finance class tend to score no higher on the test than those who don't take a class. Researchers point out that knowledge doesn't change behavior, but actual hands-on experience can have an impact. The advice?
  • Talk to your kids about money, even at a young age. And make the conversations real-world, not theoretical.
  • Let your kids make some mistakes and experience the consequences. If they choose to spend all the money they brought to the store on one item and are then upset a day later that they don't have any money left, let them wait until their next allowance.
  • And perhaps most importantly, try to model good financial behavior.
While there are plenty of good reasons for all of us to get our financial houses in order, parents have one more very important reason: our kids are constantly watching and learning from what we do. And they pick up on more than we often realize. One excellent resource for parents is Raising Financially Freed-Up Kids from Good $ense. If you have kids at home, what are some ways you're teaching them about money? Or, if your kids are on their own, what were some of the most effective ways you taught them about money? What do you wish you had done differently?