Are American Parents Teaching Their Kids About Money?

by Debra Ross, publisher, KidsOutAndAbout.com

Growing up prepared to be a productive adult requires a solid understanding of money: How to make it, how to save it, how to invest it, and how to spend it. Some schools are starting to provide courses in practical finance to high school students, but, at least for now, it's mostly up to parents to teach their kids about how to win with money. How deliberately are they doing this?

Each year, KidsOutAndAbout.com conducts local surveys to ascertain the best places to take kids. We always include some interesting additional questions about parenting. In summer 2014, we asked about whether parents are deliberately teaching their kids to manage money well. 10,000 parents took the survey in 11 regions: Albany, NY; Rochester, NY; Westchester County, NY; Buffalo, NY; Hartford, CT; Fairfield County, CT; Ann Arbor/Detroit MI (with an emphasis on Ann Arbor); St. Louis; Houston; Denver; and Salt Lake City. We found some surprising answers.

The question

5816 respondents (85% parents, 15% grandparents, 90% women... in general, from middle- to upper-middle-class backgrounds) answered the question:

Do you feel you have a solid plan for teaching kids about money management?

When we averaged the answers across the country, here were the results:

• Yes, a definite plan: 29%
• We talk about money regularly but without a definite plan: 43%
• Not really, but I probably should: 20%
• I’m not confident enough to talk with my kids about money: 3%
• I never gave this any thought: 5%

What is a "definite plan"? This was subject to interpretation, of course, but it would include everything from clear financial plans (e.g., Financial Peace Junior from Dave Ramsey) through deliberate action to get kids their own checking account and enforce careful saving and spending plans. 29% of survey respondents say they are preparing their kids deliberately to manage money well wth a well-defined plan.

The second option, "We talk about money regularly but without a definite plan" covers those who simply feel that they have a healthy attitude about money and convey that spirit to their kids, all the way to encouraging kids in general to work and earn money. On average, slightly under half of survey respondents (43%) are proceeding in this manner. If we were to conduct the survey again, we would probably reword this question, because it is hard to tell whether parents in this category feel satisfied with the level of instruction they are giving their kids; some probably do, some probably don't.

20% of parents feel that they do not have a plan but that they probably should. 3% do not feel confident enough with their own understanding of money to talk with their kids about it. 5% of parents had not given this question any thought.

In summary, 72% of survey respondents feel that they are generally on the right track to helping their kids become financially secure (sum of 1st and 2nd question); more than half of those are doing it casually, less than half are doing it more formally. 28% are not deliberately teaching their kids about money management. (Maybe they are after the survey brought it to their attention? We would love to think so.).

Comparing across the country

What we found most fascinating is that the answer percentages are remarkably similar even in different regions, but there are definite variations The graphics below show the patterns. Hartford (37%) and Houston (36%) definitely wins for the most parents with a definite plan for teaching their kids about money. Buffalo scores indicated a somewhat lower level of money-savviness than the average.

East Coast

Albany, NY

• Yes, a definite plan: 27% (national avg 29%)
• We talk about money regularly but without a definite plan: 45% (national avg 43%)
• Not really, but I probably should: 21% (national avg 20%)
• I’m not confident enough to talk with my kids about money: 2% (national avg 3%)
• I never gave this any thought: 5% (national avg 5%)

Rochester, NY

• Yes, a definite plan: 22% (national avg 29%)
• We talk about money regularly but without a definite plan: 50% (national avg 43%)
• Not really, but I probably should: 20% (national avg 20%)
• I’m not confident enough to talk with my kids about money: 2% (national avg 3%)
• I never gave this any thought: 6% (national avg 5%)

Westchester County, NY

• Yes, a definite plan: 32% (national avg 29%)
• We talk about money regularly but without a definite plan: 37% (national avg 43%)
• Not really, but I probably should: 26% (national avg 20%)
• I’m not confident enough to talk with my kids about money: 2% (national avg 3%)
• I never gave this any thought: 4% (national avg 5%)

Buffalo, NY

• Yes, a definite plan: 20% (national avg 29%)
• We talk about money regularly but without a definite plan: 44% (national avg 43%)
• Not really, but I probably should: 27% (national avg 20%)
• I’m not confident enough to talk with my kids about money: 2% (national avg 3%)
• I never gave this any thought: 7% (national avg 5%)

Hartford, CT

• Yes, a definite plan: 37% (national avg 29%)
• We talk about money regularly but without a definite plan: 37% (national avg 43%)
• Not really, but I probably should: 17% (national avg 20%)
• I’m not confident enough to talk with my kids about money: 3% (national avg 3%)
• I never gave this any thought: 6% (national avg 5%)

Fairfield County, CT

• Yes, a definite plan: 32% (national avg 29%)
• We talk about money regularly but without a definite plan: 41% (national avg 43%)
• Not really, but I probably should: 15% (national avg 20%)
• I’m not confident enough to talk with my kids about money: 5% (national avg 3%)
• I never gave this any thought: 8% (national avg 5%)

Midwest