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A Steady Decline in the Home's Position at the Forefront of Financial Education

August 21, 2018

Photo by Nattanan Kanchanaprat on Pixabay

 

I keep going back to the Wisdom of Experience investor survey that Capital Group just released. There are little nuggets in there that we need to be paying attention to.

 

The last time looking through the survey, I noticed the following trend:

 

Parents of all ages believe that teaching children about financial matters should begin at home. That’s true of three-quarters of boomers (79%) and Gen Xers (73%), and over half (55%) of millennials.

 

My first reaction to this finding was positive—across generations, parents are taking responsibility for their children's financial education. But this time I focused on the downward trend of that belief. Not a good thing.

 

To be honest, I can only speculate as to why the percentage is moving down over generations. My guess is that more and more people believe that our schools are the proper place to start. I've been hearing louder and louder calls on our schools to do more to prepare our children for adulthood. According to the survey 53% of participants place schools in the top three institutions that should be providing financial education, which is second behind parents (83%) with financial advisors being third (41%).

 

Schools are the mechanism through which we acquire much of our education. Why shouldn't they be the place where we become financially informed? This stance makes a lot of sense, and I would love to see our schools become more effective at addressing this topic.

 

What worries me, however, is that the home is not staunchly in first place. The home is far more effective a place for learning life's most important lessons about money because it's where money is the most real. Schools tend to make money more abstract, and unless schools plan to start giving out allowances or paying students for working, they're not going to be able to compete with parents on efficacy.

 

Another factor that makes the home the best first stop for a financial education is that children tend to form feelings about saving and spending by the time they are five years old. Why should schools be the first place children are financially educated when kids' feelings about such important habits are likely formed before they step on the bus? 

 

It's also pretty amazing that 17% of respondents didn't even rank the home as being one of the top three institutions in which a financial education needs to begin. For the sake of our children, it would be great for parents everywhere to recognize how much of a force for good they can be for their children's economic futures.

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