Salem Five Bank, which I referenced in a recent post about setting up a savings account for your child, polled Massachusetts parents and their kids (ages 7 to 12), about money, looking for similarities and differences between their attitudes. And while the main lessons gleaned from this were that kids actually do learn how to manage money from their parents and they listen closely to them for guidance. In fact, 96% of the children who responded said they listened to their parents the most when they discussed money, assuming that money is a primary topic in the household. I have to admit, I found just about everything else about the survey a little more interesting.
Two-thirds of parents forget to give their kids the money promised as allowance. I'm in this category, unfortunately. I admit that I frequently forget and my six- and eight-year-olds rarely remember to remind me. Well, actually, sometimes I really do forget, and other times, if I'm a little short on cash, I "forget." Either way, I'm sure my luck won't hold out much longer -- they're getting smarter as they get older. Still, it's nice to know I'm not alone here.
There is no consensus among parents on reasons to give kids money. Martha Acworth, senior vice president and chief marketing officer for Salem Five Bank, told me that "there's a wide gap in what kids are getting allowances for. Some of them have to work for it, and for many families, it's just part of being in the household. For many more families, it's based on good behavior. There's a wide range of reasons parents give an allowance, and some kids don't get an allowance at all. Every family is quite different in that regard."
What your kids spend their money on may not be what really they spend their money on. Acworth mentioned to me that 51% of the children polled said they spent their money on candy, while only 47% of the parents said that their kids spend money on candy. Just what is that other 4% spending their money on?
Here's how kids think about money:
- 42% of those polled want to buy everything they see on TV commercials.
- Half said that they wished they had their own credit card.
- 37% of the kids said that anyone can get money at an ATM, apparently not realizing you have to have money in your bank account in order to use an ATM.
- More than one-third of the children believed that if you don't have money, you can use a credit card instead.
Parents have some room for growth in their thinking, too. According to the parents who were polled, only 19 % of households have a formal financial plan, and fewer than one-third of the families strictly stick to a budget.
After hearing the results, I asked Acworth if she was depressed when she finished looking through the survey numbers, or whether she felt pretty good about what she was seeing?
"Overall, I think the takeaway is that we're doing okay," said Acworth, "but we could be doing a lot better. We're doing better than I thought we were in terms of priorities and what parents are focusing on. But are we doing great? No."
And we need to strive toward greatness when teaching our children financial responsibility, Acworth concludes, "because obviously, they learn from their parents first."
Geoff Williams is a frequent contributor to WalletPop, and he is the co-author of the book Living Well with Bad Credit.