Parents reveal the 4 most important money lessons for children
How do you teach your children to make smarter financial decisions? For most parents, educating their children about finance is a lifelong process that starts when they are young and continues long after the children become adults.
To better understand how parents can prepare the next generation to be financially savvy, Capital Group, home of American Funds and one of the world’s leading investment management firms, conducted a survey of 1,202 adult U.S. investors.
Overall, 30% of parents wish they had started teaching their children financial matters earlier in their lives. Thirty nine percent say they are still teaching their children — and that includes more than half (51%) of Gen Xers and even 28% of baby boomers. Sixty-one percent of millennials are still teaching or haven’t yet started teaching their children because they are too young.
So what tops parents’ financial lesson plans? According to the survey, parents considered these five strategies the most critical for their children’s financial future:
1. Live within your means.
More than half of parents (56%) selected this piece of advice as one of their top three recommendations for a child, teen or young adult.
2. Start saving early and regularly.
Forty-three percent prioritize early saving behavior as a key for a good start in life, and this is closely aligned with the 46% who say young people should save regularly each month and with every paycheck (for example, through their employer’s 401(k) plan).
3. Don’t carry a credit card balance, and manage credit effectively.
This was strong advice for 28% of parents, but boomers were twice as likely as millennials to select this as critical advice (39% vs. 19%).
4. Create a budget based on percentage of income.
About one in five adults (21%) across all generations chose this as a key financial lesson for children.