BALTIMORE, March 25, 2015 /PRNewswire/ -- T. Rowe Price's
2015 Parents, Kids & Money Survey revealed that parents
are letting their kids, who are 8-14 years old, learn about money
the hard way, but may not be having the appropriate financial
conversations to help guide their decisions. Additionally, the
survey found that a growing number of parents think that it is
appropriate for schools to teach financial education, and
three-quarters of parents think there should be a personal finance
requirement to graduate high school.
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Edward Bernard, vice chairman of
T. Rowe Price, commented, "T. Rowe Price believes that financial
education can be a valuable component of an educational curriculum.
We're pleased to see an increasing number of schools incorporating
it into their programs nationwide. The complexity of today's world
requires a good understanding of basic financial concepts, in order
to save and spend wisely. Financial education works best when
schools and parents work together to teach money matters and
reinforce lessons from the classroom in daily life."
T. Rowe Price encourages parents to invest in their kids'
futures by talking to them about money matters weekly. To help, the
firm created MoneyConfidentKids.com. The site provides free online
games for kids, lessons for educators, and tips for parents,
focused around the financial concepts of goal setting, spending
versus saving, inflation, asset allocation, and
diversification.
Stuart Ritter, CFP®, a senior financial planner at T.
Rowe Price, explains, "Parents need to put aside any reluctance to
discuss money matters and find a balance between providing
firsthand experiences for kids and talking about finances. While
there is value in letting kids learn from mistakes, parents should
also regularly discuss money, provide context and guidance, and use
the real-life experiences to reinforce money conversations."
Since 2009, T. Rowe Price has used online games and experiences
to engage kids in learning about money matters in a fun and
interactive way. The firm will soon launch Star Banks Adventure, a
new online game and mobile app designed with a matching concept
that reinforces learning, while engaging kids in an epic adventure
to save the galaxy from financial chaos.
LEARNING ABOUT MONEY THE HARD WAY
- Let kids make mistakes: 58% of parents
let their kids make their own bad financial decisions so that they
can learn from their own mistakes.
- Using credit cards and student loans as
teaching tools: 52% of parents believe that their kids should
have their own credit cards to learn about managing money and 61%
think it's important for kids to have their own student loans so
that they can learn about debt and responsibility.
- But kids aren't ready for the
responsibility it brings: Only 21% of kids feel knowledgeable
about credit and only 19% of kids feel knowledgeable about student
loan debt.
- Kids don't think parents are great
teachers: Less than half of kids (46%) say their parents are
doing very or extremely well at teaching them about money and
finances.
- Parents have some reluctance to discuss
money: 72% of parents experience at least some reluctance
talking to their kids about financial matters.
- Mostly because they don't want kids to
worry: The most common reason cited for having some reluctance
to discuss financial matters was that they don't want kids to
worry.
- But kids think their parents worry:
61% of kids think their parents worry about money.
SCHOOLS HAVE A ROLE TO PLAY
- Parents want personal finance to be
required for graduation: 75% of parents think there should be a
personal finance requirement to graduate from high school, but
according to the Council for Economic Education, only 17 states
have a personal finance course requirement.
- Schools are stepping up: In 2013, 3%
of kids said they learned the most about saving and spending at
school and 12% said they learned the most about investing at
school. In 2015, 35% of students say that they learn more about
money at school than they do from their parents.
- But, parents want schools to do more:
80% of parents don't think schools are doing enough to teach kids
about financial matters.
HOW TIMES HAVE CHANGED
- More parents think financial education has
a role in schools: 91% of parents feel it is appropriate for
kids to learn about financial matters in school, compared with only
70% in 2010.
- More kids are getting an allowance:
70% of parents reported giving their kids an allowance in 2015. In
previous years, we found that just 47% of parents in 2013 and 48%
in 2011 indicated that they give an allowance.
- But allowance isn't free: Of the kids
who get an allowance, about six times as many are required to earn
their allowance (85%) than those who get it with no requirements
(15%).
- Amount of money kids get for allowance is
increasing: In 2013, only 2% of kids got $51.00 or more in weekly allowance. But in 2015,
that jumped to 9%. Meanwhile, the lowest dollar range for
allowances dropped between 2013 and 2015. 68% of parents reported
giving $10.00 or less each week for
allowance in 2013, but only 50% reported the same in 2015.
- The number of kids with credit cards has
nearly tripled: In 2012, 4% of kids had credit cards, but in
2015, 11% of kids have them.
PARENTS' FINANCIAL BEHAVIORS AFFECT THEIR KIDS
- Parents want to set a good example for
their kids and think that they are: 69% of parents are
concerned with setting a good financial example for their kids and
82% of parents feel they currently are setting a good financial
example for their kids.
- But their actions don't reflect it:
68% of parents admitted to doing at least one of the following
negative actions: lying about money, taking money from their kids'
piggy bank, saying they can't afford something when they can, and
using a "do as I say, not as I do" mentality when teaching
kids.
- Kids pick up on the bad behaviors: 68%
of kids suspect their parents have told them they can't afford
something when they really can. And 40% of kids feel their parents
use the "do as I say, not as I do" mentality when teaching them.
28% of kids know their parents take money from their piggy
bank.
- "Spender" parents are more likely to have
"spender" kids: Parents who identified themselves as a
"spender" are more likely than parents who identified themselves as
a "saver" to have kids that are also "spenders" (64% versus
52%).
- Saving for vacations almost as much as
retirement: Only 44% of parents regularly save for retirement
and 42% of parents regularly save for family vacation.
- Parents are not preparing for
emergencies: 62% of parents do not regularly contribute to or
maintain an emergency fund.
- And some are not preparing for their kids'
college: Among parents who are not saving for college, the top
reason given was that they can't afford to (66%), but more than
one-third of those parents who say they cannot afford to also
indicated they have money left over after paying monthly expenses
(39%) and more than a quarter are saving for vacations (26%).
- More than half of kids know how much their
parents make: 59% are aware of how much their parents earn
annually. And 22% of those kids discuss it with their friends.
- Some spouses have secret accounts: 34%
of parents keep at least one financial account that their spouse or
partner doesn't know about.
ABOUT THE SURVEY
The seventh annual T. Rowe Price Parents, Kids & Money
Survey, conducted by MarketTools, Inc., aimed to understand the
basic financial knowledge, attitudes, and behaviors of both parents
of kids ages 8-14 and their kids ages 8-14. The survey was fielded
from January 20, 2015, through
January 27, 2015, with a sample size
of 1,000 parents and 881 kids ages 8-14. The margin of error is +/-
3.1 percentage points. All statistical testing done among subgroups
(e.g., boys versus girls) is conducted at the 95% confidence level.
Reporting includes only findings that are statistically significant
at this level.
ABOUT T. ROWE PRICE
Founded in 1937, Baltimore-based T. Rowe Price (NASDAQ-GS:
TROW) is a global investment management organization with
$746.8 billion in assets under
management as of December 31, 2014.
The organization provides a broad array of mutual funds,
subadvisory services, and separate account management for
individual and institutional investors, retirement plans, and
financial intermediaries. The company also offers a variety of
sophisticated investment planning and guidance tools. T. Rowe
Price's disciplined, risk-aware investment approach focuses on
diversification, style consistency, and fundamental research. For
more information, visit troweprice.com, Twitter
(twitter.com/troweprice), YouTube (youtube.com/trowepricegroup),
LinkedIn (linkedin.com/company/t.-rowe-price), or Facebook
(fb.com/troweprice).
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SOURCE T. Rowe Price Group, Inc.