Every parent can remember when their 9- or 10-year-old children began to question Mom and Dad’s infallibility on issues like bedtime and vegetables. Evidently it takes a lot longer for kids to question their parents knowledge of money matters, new data show.
Nearly half of adult children past age 30 say their parents made no money mistakes, according to part two of Fidelity Investments Intra-Family Generational Finance Study. That’s a stunning result given the mortgage and home foreclosure crisis and the generally under-saved and highly indebted condition threatening the retirement of millions of boomers.
One in three people age 60-plus say they don’t feel prepared financially to live to 85; almost one in two say the same about living to 95, according to a Northwestern Mutual Life survey. The half of adult kids that do question Mom and Dad’s financial prowess cite woeful retirement savings and inefficient use of savings options as their biggest concerns, according to the Fidelity survey, which polled households with at least $100,000 in savings.
For their part, parents are quick to list the financial miscues of their adult children: 42% say the kids have too much credit card debt; 38% say the kids are not saving enough for retirement; and 36% say kids do not have a large enough emergency fund. These are issues that broadly plague the parents too, though their adult kids don’t seem to grasp that.
“They are projecting a little bit,” Kathleen A. Murphy, president of Personal Investing at Fidelity, says of the parents. “They don’t want their kids to make the same mistakes that they made.”
The findings point up the importance of family discussions about money. While a broad movement rightly seeks to make financial education part of every school’s curriculum, kids most trust their parents when it comes to learning about money. It doesn’t seem to matter if parents have been poor money managers. They need to be part of the process. Parents can offer a lot of sound guidance just by helping their kids avoid the same old mistakes.
(MORE: From Here to E-ternity)
Murphy says the three most important moments in a child’s life, as it relates to learning about money, are when:
- They start receiving allowance
- They begin to contemplate college loans
- They launch their career and must weigh the value of workplace benefits
“These are all moments that children turn to their parents for advice,” says Murphy. “There isn’t enough conversation at any age.” Talking about personal finance is tougher than talking about bedtime and vegetables. It’s also a lot more important.