November is officially Financial Literacy Month in Canada—and the importance of raising our children to be financially savvy can’t be understated.
To that end, Island Savings recently took the pulse of parents across the province to determine their beliefs and behaviors regarding the financial literacy of their children…with a few surprising results.
The survey found that:
- 79.7% per cent of parents believe they bear the responsibility for teaching their kids about money (and they appear to be putting their money where their mouth is—79.4% of parents said their kids learn from them)
- Only 5.3% of those surveyed indicated their children are not yet learning about money matters, likely because their children not yet at an age when financial concepts stick
- Even better, parents have an open attitude when it comes to using their real-life household finances as a learning tool: 71% of parents indicated three or higher on a scale of one to five describing the transparency of their household budget with their children (where one indicated “not at all” and five indicated full transparency)
- Among those who believe parents have the primary responsibility to teach their children about money, only 56% believe that there are sufficient resources available to help them. Among all respondents this number drops to 53%
- Less than 25% of parents report being “extremely confident” when it comes to teaching their kids about money
This lack of resources and confidence may be why young adults continue to demonstrate poor financial literacy. Take for instance a recent report by the Filene Research Institute, using data from the National Financial Capability Study in the United States. It noted that 68% of millennials have a low level of financial literacy, even though nearly 70% believe they have a high level of financial knowledge. Closer to home, the Financial Consumer Agency of Canada’s report on the 2014 Canadian Financial Capability Survey indicated that too few Canadians have a budget.
Combined, these stats present a significant opportunity to improve financial literacy across generations and that learning starts at home. Like any skill, it’s best to start sound financial management practices early and involve kids in specific family savings goals. Instead of saying no to a child’s request for a new toy, use it as an opportunity to explain the concepts of earning, saving and buying.
Professionals can also step into provide in-depth financial knowledge-building for parents. The more we can help parents mange the complexity of today’s financial landscape, the better we can financially prepare future generations. The survey results show there’s a clear role for professionals when it comes to financial literacy—it’s why I focus so strongly on helping families build their financial acumen at Island Savings.
So talk to your financial advisor to identify opportunities that involve your kids in your family finances and provide them the tools to become adept money managers in the future.