Parents Are Poor Teachers of Money Management By Mary Deibel
Scripps Howard News Service
Doug Landau tries to teach his children by example how to manage money and not be a "Do-as-I-say, not-as-I-do" dad.
"We're wrestling now with whether they can have credit cards or not," he says. Classmates of his children, Rebecca, 15, and Zach, 13, already are putting it on plastic with their parents' approval. "Maybe in the future, for emergencies," Landau says, "but I want them to understand first that credit card bills spell trouble if they don't get paid off."
The Landaus aren't typical, judging by a new report on families and money that has found that 97 percent of parents give themselves high marks on their financial smarts, but:
- Only 45 percent of parents make a budget and try to stick to it.
- Fifty-five percent don't pay off monthly credit card bills but let the balance build up.
- Thirty-three percent say saving is unimportant or only somewhat important.
- Fifty-five percent can't specify what a child should do with $5,000 to invest.
"Too many parents overestimate their financial knowledge and condition and underestimate the power they have to shape their children's attitudes toward money, but children watch, listen and absorb," says Dallas Salisbury of the Employee Benefits Research Institute and the American Savings Education Council.
Both groups joined the TIAA-CREF Institute, the non-profit offshoot of the giant teachers' retirement fund, in surveying 1,000 parents with children 6 through 17. The survey gibes with other studies including the federal Securities and Exchange Commission's findings that half of U.S. adults don't know the difference between stocks and bonds.
(Stocks are ownership shares with your payback pegged to the company's performance, while bonds are borrowings by government or business, which pay you interest for making the loan.)
Federal Reserve Board Chairman Alan Greenspan says financial literacy should be a priority in the workplace and in schools "to ensure that consumers can meet their immediate obligations as well as achieve their broader goals of buying a home, funding higher education for themselves or their children and preparing for retirement."
Toward that end, the Fed offers its employees seminars on how to buy and own that first home and sponsors a national economics contest for high school students, more and more of whom are being offered "personal finance" as an elective course.
"Every child leaving home at 18 for college or a first job should be able to run a cash budget," Kiplinger family finance expert Janet Bodner says. "For too many youngsters, plastic is plastic, and as long as there's a direct pipeline to Mom and Dad's wallet, credit cards are OK by them."
Bodner counsels that facing the double whammy of huge student loans and credit card debt can be overwhelming for young adults trying to make it on their own.
At Rachel Carson Middle School in Herndon, Va., eighth-grade teacher Susan Hynes is already giving Zach Landau and the rest of his class a financial education.
This spring her students are pretending to hold jobs they've drawn from a hat, along with the appropriate salary. Students then face repeated chance drawings on "whether they win the lottery--Zach's plan--or this is the week the car breaks down," Hynes says.
As for Zach, he saves some of his $6.50-a-week allowance along with gifts for birthdays and special occasions, even though "there's no instant gratification." He prefers spending his money on insects and bugs to lavish on his live collection of lizards, salamanders, gekkos and newts.
He also just collected a check for refereeing the last season of kids' soccer, part of which he'll invest. "He told me his paycheck was bigger than mine last week," says his dad, Doug Landau, a trial lawyer by trade. "I'm not saying, but Zach certainly did well by himself and by the family."
On the Net, survey results and family financial education tools including piggy bank wrappers, savings calculators and "Money Saves" pamphlets can be found at: www.asec.org and www.tiaa-crefinstitute.org .
(Contact Mary Deibel at DeibelM@shns.com or www.shns.com.)
