Apr 14, 2023
Parent Financial Socialization
Our financial planner, Melissa Visbal, recently attended a webinar presented by the Financial Therapy Association on parent financial socialization. We’ve included a recap for any parents out there trying to figure out how to instill good financial habits in their children.
Who is the #1 source of financial learning for children?
Parents. Other sources include school, work, peers, and media. Children as young as three are capable of learning basic things about money and forming basic financial habits. Start as early as possible and don’t put it off until they are a teenager or adult.
What information should be taught around finances?
How should the information be taught?
Three main methods: Modeling, Discussion, and Experiential Learning
Common Worries & Rebuttals:
Worry #1: Appearing incompetent. Having honest discussions can help you find answers together and can be treated as an opportunity for both of you to learn and bond.
Worry #2: Kids will share the information. Decide when it is appropriate to share this information and ask them not to share. Trust them. What’s the worst that can happen?
Worry #3: Kids may become stressed. Make sure they know it is not a burden on their shoulders. The struggles are for you to work out. But they can learn from your struggles, and they might be able to help too (such as being more understanding when you say “no” to a purchase).
Example: Use Monopoly Money to discuss household income and expenses. This can also help you explain to children why you might have to say no to things once they see how much money is leftover after meeting the family’s living expenses.
3. Experiential Learning
Mistakes are part of learning:
Which mistake would you rather them make? The small mistakes can help save thousands of dollars later.
Don’t wait until college for them to “figure it out”. College shouldn’t be the first time they learn what it means to work, pay for their own stuff, use a bank account, or credit card. Kids can benefit from age-appropriate responsibilities. These methods discussed above can increase financial confidence in kids entering adulthood and ultimately decrease stress on you as parents.
LeBaron Black Dr. A, Okamoto R. Parent Financial Socialization. Financial Therapy Association. Published online April 7, 2023.
Financial Planning Associate
Melissa came to Narwhal in the summer of 2018 following the completion of her master’s degree in financial planning from the University of Georgia, where she also earned her bachelor’s degree in consumer economics. Her interest in the field started with learning about consumer behavior, specifically its relation with complex moneymaking decisions. Melissa recently received her CFP® Certification in January 2021. Working with a CFP® professional can help you find the path to achieving your financial goals. Your goals may evolve over the years as a result of shifts in your lifestyle or circumstances such as an inheritance, career change, marriage, house purchase , or a growing family. Melissa is here to help you through that process. When she’s not working, Melissa enjoys cycling, cooking, and spending time with her beagle and two nieces.
At Narwhal Capital Management, you’re more than just a portfolio, and it’s not all about the numbers. Let’s start with a meeting about your needs and future goals.