T. Rowe Price Recommends Families Talk To Their Kids About Finances Amid Global Economic Uncertainty
The firm's 2020 Parents,
Parents facing unforeseen events such as furloughs, pay reductions, business closures, and falling asset values should consider discussing with their kids the impact on the family's finances. This will help kids better understand changes to spending habits and future plans, including education.
- More likely to have a budget (88% versus 73%)
- More likely to have an emergency fund (60% versus 43%)
- More likely to put 10% or more of their income toward savings (66% versus 48%)
- More likely to have a retirement account (56% versus 36%)
To help parents discuss money with their children,
The economic fallout of the coronavirus makes money conversations more important than ever
Regardless of whether parents are under financial stress, the novel coronavirus offers an opportunity for parents to broach financial subjects with kids such as the importance of emergency funds, manageable levels of debt, the concept of financial flexibility, and how to keep fixed expenses down. The current situation helps kids put "what if" events into context and can make abstract money concepts understandable.
Kids are watching parents and how they manage money
More than 90% of kids perceive their parents' financial habits as good, very good, or excellent, and 62% said the conversations they have with their parents about finances makes a difference, according to
Parents don't have to be money experts to teach financial education
While parents' confidence about talking to their kids about money management is low—only about 26% of parents felt they were extremely knowledgeable about managing expenses—data from
"While many families are grappling with financial unknowns, parents should remember that their kids may be picking up on unspoken cues about money and the family's situation. We know that many parents are reluctant to discuss money matters with their kids. But we also know that kids are better positioned for financial responsibility if their parents do discuss money with them. It may be particularly difficult to have these conversations now amid the economic fallout of the coronavirus, but it's more important than ever to be transparent with kids."
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Amy Burke Friedman, PROFILES, 410-382-5496, firstname.lastname@example.org; Heather McDonold, T. Rowe Price, 443-834-4132, email@example.com