September 25, 2014 1:28 am
In fact, a recent survey conducted by T. Rowe Price found that 60 percent of kids whose parents frequently talk to them about budgeting feel they are smart about money, as opposed to just 34 percent of kids whose parents do not.
Financial experts agree that the sooner parents start imparting key money concepts, the more effective they will be in raising financially responsible adults. While it may seem like an involved topic, it's as simple as starting a conversation.
"There is a clear correlation between talking with kids about financial topics and their habits," said Judith Ward, a senior financial planner with T. Rowe Price. "Parents can invest in their kids by talking to them weekly about money matters."
The survey also found that parents are having more financial conversations with boys rather than girls.
"Boys and girls should have the same opportunities to learn about money matters at home so they can grow into financially savvy adults," Ward says. "By talking to kids of either gender about things like saving for college, parents can help kids get involved and excited about their future."
How can parents start the conversation? First, learn to engage in frequent money conversations with your kids. While you can sit down to discuss in a formal manner, casual dialog may be more effective and memorable. From trips to the grocery store to a visit to your neighborhood bank, there are plenty of real-world situations where you can teach your kids about spending, saving, and other money concepts.
Ward offers these tips to help parents initiate conversation:
- When discussing weekend plans: When your kids plan for weekend fun with friends, ask them how much the activities will cost. Find out if they have budgeted for these expenses and if they are saving for any other upcoming events.
- When talking about their future: Ask your child what they wish to be when they grow up. This is a great opportunity to talk about what kind of college degree may be required for the profession, how much getting the degree can cost, and the need to save for it in advance.
- When talking about extracurricular activities: When talking about extra activities like soccer, dance, karate, piano lessons and others, talk with your kids about the cost of each. Help them understand that all of these add up to a lot of money, so they can help you save by only doing the ones they really enjoy.
Source: T. Rowe Price
Published with permission from RISMedia.