Long before kids encounter financial literacy in school, they learn from the Bank of Mom and Dad—and those lessons (right or wrong) can really stick.
Last year, 28 percent of adults told the National Foundation for Credit Counseling that they primarily learned personal finance from their parents. Among kids currently ages 8 to 14, 65 percent say they learn more about money from their parents than they do at school, according to a T. Rowe Price survey released last month.
The difficulty? Although the T. Rowe Price survey found that 69 percent of parents are very or extremely concerned about setting a good financial example for their kids, 40 percent are relying on a "do as I say, not as I do" attitude for teaching their kids about money. Almost half don't have an emergency fund that would last three months or more, 28 percent carry over a credit card balance every month and 28 percent have taken money from their child's piggy bank.
To be fair, being a good financial role model isn't easy. "It takes effort," said Judith Ward, a senior financial planner at T. Rowe Price. "It really does, and that's why a lot of parents may not be doing these things with their kids." Some mistakes, experts say, are those parents don't even realize they're making:
Shielding kids from money talk
"Probably the mistake parents make most is that they don't have conversations about money with their kids," said Laura Levine, president and chief executive of the Jump$tart Coalition for Personal Financial Literacy. They have plenty of reasons, from not wanting their kids to worry about financial matters, to thinking kids are too young to understand or that they might blab sensitive details. But in the absence of information, kids will draw their own conclusions based on what they overhear or see you do. "The message I have for parents is, it's not all or nothing," said Levine. Kids don't need to know your exact salary to get the message that the family's finances aren't precarious (often what they really want to know). Base the context on your child's age.