The apple does not fall far from the tree when it comes to kids and money, according to T. Rowe Price.
Parents who have good financial practices tend to pass them down to their children, who in turn exhibit good habits, says the “2017 Parents, Kids & Money” study released Thursday.
Unfortunately, the study of 1,014 sets of parents and 1,014 children between the ages of 8 and 14 shows bad habits are equally as transferrable.
Parents who have more than $5,000 in credit card debt are more likely to have children who spend money as soon as they receive it. Fifty-eight percent of the kids with parents with high credit card debt spend money as soon as they get it versus 44 percent of children whose parents have low credit card debt.
Likewise, they are more likely to expect parents to buy them what they want (65 percent versus 57 percent).
Similar comparisons were made for other parental factors. Those who have declared bankruptcy are more likely to have children who do not save money (16 percent versus 6 percent).
When parents save money, the kids are more likely to save money and are more likely to have talked about money with their parents, the survey says.
Kids who manage their own money have better money habits. They save. Also, they do not lie to parents about what they spend money on, nor do they feel ashamed because they do not have as much as other kids.
“The key is openness and letting kids control some of their own money," says Roger Young, senior financial planner at T. Rowe Price. “For instance, 68 percent of the children in homes where bankruptcy was declared—and they were told about it—say they are very smart about money. When they are not told, only 30 percent say they are smart about money.”
“Talking about money helps create good habits,” says Young.