Parents’ attitudes toward money and kids

As parents, we pick up a fair amount of information from other parents. There’s some good advice, some bad advice, and then there are opinion surveys.

Even though I tend to second-guess the way some of the questions are phrased, I like opinion surveys because they are a window into what large numbers of other people are thinking. Even if the view through that window isn’t perfect, we can get enough insight to question certain issues and think them through from a new perspective.

T. Rowe Price just released its 6th annual “Parents, Kids & Money Survey.” I like this survey because I think teaching good money habits is an important parental responsibility, and looking at this survey’s results is a good chance to get a feel for how other parents are handling the relationship between their kids and money. After all, though parents are expected to talk to their kids about money, it seems we rarely talk to other parents about how to talk to our kids about money.

As you’ll see below, I take some of the survey responses with a large grain of salt. Still, the following results of this survey caught my eye and made me think:

1. One-in-four parents regularly carries a credit-card balance. To be clear, this is distinct from those parents who said they occasionally carried a small balance. Too much reliance on credit can become a hereditary problem. It not only burdens the parents, but it gives the children an unrealistic view of what is and isn’t affordable.
2. Sixty-one percent of children shop online — including 54 percent via mobile apps. Of course it is wonderful that this generation of kids is so computer literate and has such ready access to information. However, the immediacy of online shopping worries me, especially when it comes to mobile apps which tend to prompt spontaneous spending. I think parents should have strict rules about approving all online spending — not just to make sure nothing inappropriate gets through, but to make sure the kids aren’t buying too impulsively. Perhaps there should be a cooling off period between asking for something and being allowed to buy it.
3. More kids have computers, tablets, and mobile phones than have bank accounts. This may not be particularly surprising, but it is a little ominous in terms of the message kids are getting. When they have more familiarity with media for spending money than vehicles for saving it, which habit do you think will be developed more?
4. Nearly half the parents use money to encourage good behavior from their kids. Actually, the way the survey was worded, 48 percent of parents say they sometimes “bribe” their kids to encourage good behavior. I think “bribe” is too harsh a word. After all, the Supreme Court (in its wisdom) ruled that money is speech, so isn’t giving our kids money just a nice way of talking to our kids? Seriously, I think there is an important line to be drawn. It is fine to offer financial incentives for achievement, from good grades to getting chores done. However, money should never be used to try to buy off bad behavior. Never negotiate with terrorists, especially when you have to live them.
5. Thirty percent of parents raid their kids’ piggy banks. This is disturbing, though it may be more innocent than it sounds — the pizza guy is coming up the driveway and you realize you have no cash, so… However, if it’s done behind the kid’s back, it’s a problem; and if it’s a habit, that’s also a problem. Perhaps teaching the little tykes to charge interest will help cure you of this habit.
6. Sheltering is not always the best strategy. Seventy-four percent of parents have some reluctance to talk to their kids about money, and not wanting them to worry about it is the most common reason. I understand the importance of parents not “over-sharing” with their kids, but being realistic about the family’s financial situation will help save conflict and disappointment in the long run.
7. Lying about money is dangerous. Twenty-eight percent of survey respondents said they sometimes lie to their kids about money. As with the question about bribery and the question about raiding the piggy bank, I suspect this one might look worse on paper than what parents really mean. Full disclosure is not always the best strategy with kids; but when it comes to actually lying, that’s the type of thing that tends to backfire at some point.

No matter how much we teach our kids, there is a considerable amount they are going to have to learn about handling money first hand, by trial and error. Perhaps something we can do is make sure they do not accumulate too much debt at an early age because, once someone does that, many of the best lessons about personal finance become impossible to apply.