One idea is to plug kids into online games or mobile phone apps that teach them about money, and specifically about savings and spending. T. Rowe Price offers an online program called MoneyConfidentKids.com that covers that same ground.
T. Rowe Price also advises taking the following steps to close that "cash communication" gap between parents and kids:
- Set goals: Talking about saving for a summer vacation is a good place to start, but parents also need to explain the importance of setting long-term goals such as saving for a car, college, or even retirement.
- Leverage everyday "money situations": Interactions involving money, whether it's using coupons at the grocery store, balancing a checkbook or comparison shopping for a new television, are opportunities to teach kids valuable money lessons.
- Lead by example: The survey revealed that 95% of kids say they have learned the most about saving and spending money from their parents. When parents act as good financial role models, kids have a better chance of learning the right lessons.
The survey emphasizes that while kids do value cash allowances and other financial gifts from parents and grandparents, they do want to learn about money, too.
"Kids look to their parents as financial role models, and for that reason parents need to not only have frequent discussions with their kids about money, but also lead by example," says Stuart Ritter, a senior financial planner at T. Rowe Price, and a father of three children. "Parents could do better on two fronts: They need to share financial concepts with their kids like goal setting and smart saving, as well as prepare their own finances for the long term." It's up to parents to bring those lessons out of the shadows and into the light, and show their kids how money works, and how to best build a lifelong savings and wealth creation program.Do that and watch your children thrive in the financial side of their lives for the rest of their lives.