Did your parents teach you about finances and money? If you are a parent now, will you teach your children about finances and money? I know my mom tried her best to teach me when I was younger, but I was a typical child then a teenager who knew better than their interfering parents. If I had only listened to them and taken my mom’s advice, I would be in a much better position today. I am have made amends and now have incorporated many of the things my mom tried to teach me into my financial habits and many I have passed on to you. According to a recent study by Capital Group parents, today are talking to their children about finance when they are 12 if not younger.

According to the study, most adults today wish that someone would have spoken to them at a younger age and that they would have listened to their parents. It is estimated that today’s parents are speaking to children age 12 and under about saving early at around 39% of millennial and Gen X parents. That is up from 22% of baby boomer parents. I am proud to say that my mom was a very influential part of that 22% and still provides me with a good ear to listen to my ideas even to this day.

As children are getting older, parents are moving on from simple savings to topics such as maintaining good credit, buying a car, wise use of credit cards and how to try and avoid debt. Of course, as we have looked at in previous weeks the cost of higher education is also always a topic in households where the children wish to further their education beyond high school. And that can and is often a very serious discussion parents have with their children. And in many instances that may be the first time a child is introduced to the topic and world of finance. And let us face it, by then it may be too late, and your children will be behind the eight ball so to speak.

Also in the survey, about 1,200 adults from age 21 to 71 stated that they wished they had learned more about certain financial aspects and topics when they were younger. Mainly these were the effects of saving in a 401(k) plan and to avoid 401(k) loans, advice on debt in general, the hazards of credit card use and how investing really works. As you all know by now, I am a huge believer of having children that work when they are teenagers open ROTH IRA’s for their retirement. The power of compounding from your teenage years to age 59 ½ is really an amazing wonder. If you do not believe me go into Excel and us the Future Value function to see what it can do even for a modest amount of money that is invested today.

The study also found that nearly 79% of fathers say they are the primary investment decision maker in the household it is the mothers who take the lead and initiative when it comes to educating children about money. Again, I thank my mom who was in the odd 21% of the families that the mother was the lead investor and I must give her props; she did an amazing job for herself and my dad.

Now when it comes to deciding who was and was not a success at teaching their children the results are interesting. Only 69% of the parents think that they were somewhat successful in educating their children. Of the remaining 31%, 19% of parents were confident that they were completely satisfied with the education that they provided their children when it came to finances. That means 8% were not very successful and 3% were not successful at all when it came to educating their children.

When asked what were the most important things that they could teach their children about finances parents stated what I have said for a long time, save early and often. Another topic that they stress is to take full advantage of an employer’s 401(k) match as that is leaving a free 100% return on the table if you do not participate in the plan. Of course, parents stress the importance of carrying no debt on your credit cards to avoid having compounding work against you. And then they stress the importance of creating and abiding by a well-crafted budget. I think that budgets are the key to someone’s financial success for the simple reason if you do not know what you make and where it goes you will have trouble achieving financial freedom.

Here are some suggested topics to discuss with your children by age range. Children under the age of 12 should learn the basics of saving early, saving for college and making a budget. Teenagers should focus on buying a car, the wise use of credit cards, still saving for college and using a budget. This is a good age at which also to incorporate the importance of good credit to your children. Then when your children are in their twenties, you should shift to renting their first apartment or buying their first house and purchasing proper insurance policies.

If you have any questions or comments, please feel free to leave them here or contact me directly.