The Parent Trap
Parents spend lavishly on children but don’t talk to them about money.
Do as I say, not as I spend.
That might be the new admonition from parents to their children. A recent poll reveals many parents have gone into debt buying items they knew their children didn’t need. Yet they still do it, and they don’t tell their children why such overspending is a bad idea.
The Parents, Kids & Money Survey was commissioned by T Rowe Price and quizzed more than 1,000 parents with children between the ages of 8 and 14. Among the startling results, 46 percent of parents have “gone into debt to cover something their kids wanted” while 57 percent say they “spend too much on things their kids do not need.”
Even worse, 58 percent “worry about spoiling their kids,” and for good reason – 57 percent say their children “expect their parents to buy them what they want.”
Since the parents are very self-aware of how their own spending habits are hurting their children, you might think they’d use this as a teachable moment. You’d be wrong…
When asked how often they take advantage of teachable moments that occur throughout the day to discuss financial topics, less than half of parents (44%) take advantage of the opportunity to discuss money with their kids most of the time.
When they do talk to their children about money, the decision becomes sexist…
While many parents have some reluctance to discuss family finances (71 percent), they tend to talk to boys more about money than girls. When asked why, one of the top reasons given was that boys need more help with money.
While this might sound surprising to many people, Gary Herman has heard it all before. The president of Consolidated Credit says it’s a time-worn conflict between responsible spending and the urge to do everything we can for our children.
“Even parents who would never buy something frivolous for themselves feel a deep psychological need to please their children,” Herman says. “The problem is, those children may enjoy a toy now, but they’ll quickly outgrow it. Meanwhile, teaching them sound financial principles will benefit them for a lifetime.”
How do you overcome this psychological tug to please your children now, even if it hurts them later? Consolidated Credit has a special report called Transitioning Teens to Financial Success.