How do parents envision their children’s financial future?
They’re not optimistic.
More moms and dads believe it is likely life exists on other planets than they believe in a secure financial future for their sons and daughters here on Earth.
In a T. Rowe Price survey, 59 percent of parents of 8- to 14-year-olds said it is likely life exists on other planets, while only 26 percent believe Social Security, in its current form, will exist when their children are ready to retire. More parents, 39 percent, believe their kids will become millionaires.
Given the overwhelming belief that their kids will not be able to depend on Social Security, what is the most important financial advice these parents said they can give their children?
Thirty-one percent said “work hard” – just 18 percent said “start saving for retirement early.”
This is troubling. If Social Security is not available, their children will need to bank more than a million dollars in retirement savings. The limited focus on savings also is surprising considering parents’ financial regrets:
Forty-three percent said they did not save enough, 32 percent spent too much or were in debt and 29 percent started saving too late.
One of best things we can do for our children is teach them to avoid the mistakes we made. But clearly we are not doing that with financial matters.
About one-third of parents reported they avoid talking to their children about money and more than 75 percent admitted not telling the truth to their kids when it comes to money-related topics – 15 percent actually lie weekly.
Most often parents are not telling their children how worried they are about money matters. While this may seem noble, it can actually deprive them of a learning opportunity. Kids need to become familiar with life’s challenges and its financial decisions.
So what should we, as parents, be doing when it comes to money and our children? To raise financially secure sons and daughters we can:
Talk frequently with our children about money.
Learn about how to take control of our personal finances and set a good example for them.
Teach them about saving and how to make money by giving them age-appropriate jobs.
Let them make minor financial mistakes early in life when the consequences are small.
Tell the truth about financial matters.
Teach them to start saving early and regularly for retirement.
With experience and practice, our children can become smart managers of their money. Parents can help them build good habits that will last a lifetime.
We can debate the existence of aliens, but there is no argument that raising financially healthy kids is one of our most important jobs.