By Kelly Khakh
As kids across B.C. get into their school routine after the holidays, the importance of educating and raising our children to be financially savvy can’t be understated—the future financial health of the country depends on it. To that end, Envision Financial, a division of First West Credit Union took the pulse of parents across the province to determine their beliefs and behaviors regarding the financial literacy of their children. The results were illuminating.
The survey found 79.7 percent 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 percent of parents said their children learn from them. Only 5.3 percent of those surveyed indicated their children are not yet learning about money matters, likely because they are not yet at an age when economic concepts stick.
Also promising, it appears parents may also be willing to use their household financial situation as a real-world teaching tool. The survey found that parents have an attitude of openness and sharing—rather than reluctance or opposition—when it comes to discussing finances with their children. When asked how much they discussed their household’s finances with their kids, more parents leaned toward transparency, with 71 percent indicating three or higher on a scale of one to five (where one meant “not at all” and five indicated full transparency).
While it’s heartening to see such a high percentage of parents taking responsibility for their children’s financial education, the survey does reveal areas for improvement. Among those who believe parents have the primary responsibility to teach their children about money, only 56 percent believe that there are sufficient resources available to help them. Among all respondents, this number drops to 53 percent. Furthermore, less than 25 percent of parents report being are “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 percent of millennials have a low level of financial literacy, even though nearly 70 percent 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.
These stats, combined, 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 providing in-depth financial knowledge-building for parents. The more we can help parents manage 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. That’s why Envision Financial has such a strong focus on building banking knowledge. Talk to your local financial advisor to identify opportunities to help involve your kids in your family finances and provide them the tools to become skilled money managers in the future.