For Immediate Release: April 12, 2001
Washington, DC - When it comes to educating kids about financial matters, how much do parents really know and are they stepping up to the plate? A new survey released today finds parents overestimate how much they know about finances and underestimate the role they can play in teaching their children about money management.
The 2001 Parents, Youth & Money Survey, underwritten by the TIAA-CREF Institute, was released today by the American Savings Education Council (ASEC), the Employee Benefit Research Institute (EBRI), and Mathew Greenwald & Associates. The survey shows that the majority of parents feel confident about their understanding of financial matters (51 percent say they understand them very well, 46 percent fairly well), and most think they do a good job of managing their money (25 percent think they do an excellent job and 57 percent think they do a good job).
Yet, many of their actions and behaviors contradict this self-assessment. For instance, 55 percent of parents roll over credit card debt each month. When asked where they would put or advise their child to put $5,000 to save for education or some other long-term goal, 55 percent do not identify specific long-term investment vehicles such as mutual funds or stocks that historically offer higher rates of return. Instead, more than 1 out of 3 parents cite low-yielding certificates of deposit (CDs), savings accounts, and savings bonds. Twelve percent say they would put savings in a bank or savings and loan, but are unable to articulate a specific type of account. Finally, less than half (45 percent) of all parents say they make a budget and stick to it most of the time.
"Our 1999 Youth & Money Survey found that 94 percent of students turn to their parents for financial education and guidance," said Dallas Salisbury, ASEC chairman and CEO. "The bottom line is that most parents, on a regular basis, likely have a major impact on the financial attitudes and behavior of their kids – both positive and negative."
Interestingly, the 2001 Parents Survey shows that most parents do not think it is their sole responsibility to educate their kids about finances. Thirty-eight percent of parents feel it is exclusively their duty to teach financial education to their children, 61 percent feel it is the responsibility of both the parents and the child’s school, and less than 1 percent feel it is strictly the school’s responsibility. In addition, when asked to specifically describe what they have done to teach their kids about financial matters: 56 percent of parents can name only one example; 31 percent cite two examples; and 8 percent say "nothing" or "don’t know." Ironically, 81 percent of parents who feel they do a fair or poor job of managing their money still consider themselves effective in giving their kids financial advice.
"Parents must get educated about money management if they want to pass on effective financial lessons and skills to their children," said Don Blandin, president of ASEC. "Too many students are graduating from high school with no understanding of the basic principles of earning, saving, budgeting, debt, and investing."
The 2001 Parents Survey shows that many parents are missing day-to-day opportunities to engage their children in conversations about money management. Here are some ideas for parents to help kids become savvy savers and consumers:
Discuss family financial matters (e.g., family budget, allowances, routine shopping, purchase of a new car or home, planning a vacation, paying for college, etc.) with your children.
Teach your kids to identify financial goals, create a budget, track expenses, and comparison shop. Obtain financial education materials from your work place, educational organizations, or financial institutions, and share them with your kids.
Incorporate the media as a tool to educate your kids about financial matters: newspaper articles, television and radio programs, magazines, and books.
Use financial planning software and the Internet as a resource for financial information and education.
Explain to your kids how different financial institutions and products work (e.g., banks, insurance companies, mutual funds, a checking or saving account, 401(k) plans, IRAs, stocks, bonds, credit cards, savings bonds, etc.).
Talk to your kids about their future job or business ownership prospects. Discuss with your children what options they have when they receive a monetary gift (e.g., saving, investing, giving to charity, etc.).
"We hope these important research initiatives will help parents and children recognize the enormous value of understanding everyday financial basics," said Madeleine d’Ambrosio, executive director of the TIAA-CREF Institute. "Furthermore, we hope that financial service providers, K-12 teachers, financial advisors, and youth leaders will strive to develop, provide, and employ tools and resources to strengthen family financial literacy."
In conjunction with the 2001 Parents Survey, ASEC and the TIAA-CREF Institute have created the following tools to help educate parents and kids about financial matters: Money "Talking Points" for Parents, Youth & Money Poster, Interactive Savings Goal Calculator, and Piggy Bank Wrapper. All tools are available on the ASEC and TIAA-CREF Institute Web sites at: www.asec.org and www.tiaa-crefinstitute.org/data/surveys/ps_docpg.html.
The 2001 Parents, Youth & Money Survey gauges the views, attitudes, and behavior of American parents regarding various financial issues, their savings and investing habits, and their interactions with their children regarding money. The survey was conducted within the United States from Jan. 4 to Jan. 30, 2001, through 19-minute interviews with 1,000 individuals who have primary responsibility for one or more children between the ages of 6- 17. According to data from the U.S. Department of Commerce, Bureau of the Census, in 1998 there were 102,528,000 households in the United States. Of those households, 34,760,000 (34 percent) had children under the age of 18. The 1999 Youth & Money Survey gauges the views, attitudes, and behavior of 1,000 students ages 16- 22 about personal finance. In theory, a sample of 1,000 yields a statistical precision of plus or minus 3 percentage points (with 95 percent certainty) of what the results would be if all households with children ages 6- 17 were surveyed with complete accuracy. (Subgroup responses have larger margins of error, depending on the size of the group.)
EBRI was founded in 1978, with the mission to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education. EBRI is a private, nonprofit, nonpartisan public policy research organization based in Washington, DC. EBRI does not lobby and does not take positions on legislative proposals.
ASEC is a coalition of private- and public-sector institutions that undertakes initiatives to raise public awareness about what is needed to ensure long-term personal financial independence. ASEC works through its partners to educate Americans on all aspects of personal finance and wealth development, including credit management, college savings, home purchase, and retirement planning. ASEC develops and distributes educational materials, all of which are available in hard copy and on the ASEC Web sites: www.asec.org and www.choosetosave.org ASEC is a program of the EBRI Education and Research Fund.
Mathew Greenwald & Associates, Inc. is a full-service market research company with an expertise in financial services research. Founded in 1985, Greenwald & Associates has conducted public opinion and customer-oriented research for more than 100 organizations, including many of the nation’s largest companies and foremost associations.
TIAA-CREF Institute is dedicated to the pursuit of knowledge on issues that significantly impact lifelong financial security. Fields of study include: pensions and retirement; health, life and long-term care insurance; investment products and strategies; endowments and planned giving; higher education financing and trends; corporate governance; and financial literacy.
For more information about the Institute's work, visit: www.tiaa-crefinstitute.org.
Danny Devine, EBRI,1 202 775-6308, firstname.lastname@example.org
Claire Sheahan, TIAA-CREF Institute, 1 212 916-4666, email@example.com
Ruth Helman, Mathew Greenwald & Associates, 1 202 686-0300, firstname.lastname@example.org