When you think of how you learned about money as a child and as a teenager, what do you think of? You might remember parental advice about spending and saving, maybe a warning about debt or excessive credit card use, and, possibly, your first piggy bank. Parents’ financial teachings for their children and teenagers are especially important today given the challenges that many emerging adults, those ages 18–30, are facing in the U.S.
According to a Pew Research Study from 2020, more than half of U.S. emerging adults are living with their parents.1 What’s more, a number of emerging adults are acquiring debt without any form of collateral and student loans without guarantees of return on investment.2 These and other forms of financial mismanagement seem to be leading towards an increased amount of financial stress and struggle for emerging adults.3
Part of the cause of this financial stress and struggle is a lack of financial knowledge. Two reviews of a decade’s worth of research into emerging adult’s financial education (2010-2020)2,3 along with other studies4,5,6 have shown that emerging adults are not entering these decisive years with a practical knowledge of how to manage their money.
Parents have been found to be the most impactful source of financial learning for their children, and this parent to child financial education could be a solution to the monetary problems emerging adults are facing.3 In addition, better financial education could also benefit these emerging adults’ romantic relationships. In a new study, Dr. Ashley LeBaron-Black and her colleagues examined whether parents’ financial education from childhood and adolescence could benefit their emerging adults’ financial well-being and romantic relationships.7
The study found a strong positive association with romantic relationship flourishing and financial education from parents. This means that, on average, those participants of the study that had better financial education as a child and teenager also had romantic relationships wherein they felt that they were becoming their best self.
The study analysis also showed that those who reported better financial education from parents had healthier financial behaviors, and these healthier financial behaviors benefited the emerging adults’ romantic relationships. Finally, those with better financial education from their parents also reported less financial distress. These results are summarized in the diagram below.
Takeaways:
Understand Your Financial Education History. From the study, we know that how your parents taught you about finances while growing up likely has a significant impact on your financial behaviors, romantic relationships, and financial distress. Understanding what your parents did, or did not, give you in terms of practical financial skills and knowledge can be a great place to start in understanding how to live a growth-oriented lifestyle financially—and relationally. Consider asking your parents the financial lessons they sought to instill in you and then making a list of your good and bad financial habits. No matter what you recognize about your financial upbringing and no matter where your finances are currently, remember that your financial past does not determine your financial future. Improvement can come with time, effort, proper guidance, and—according to LeBaron-Black’s research—improvements in your romantic relationship and financial distress will hopefully follow.
Teach Children Healthy Financial Practices During their Childhood and Adolescence. This study found that those who were taught about finances well in their childhood and teenage years had better financial practices, better romantic relationships, and less financial distress during their emerging adulthood. To give your children a better chance at achieving those improved outcomes, you can prepare now by learning how best to manage your own finances and then teach your children and teenagers through your words and actions. Reputable resources for financial counseling can be found here. Any effort to help your children and teenagers thrive financially, according to this research, will likely be worthwhile in the long run.
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References:
1Pew Research Center. (2020). A majority of young adults in the U.S. live with their parents for the first time since the Great Depression. Retrieved from https://tinyurl.com/mnp62s24
2Bartholomae, S., & Fox, J. J. (2021). A decade review of research on college student financial behavior and well-being. Journal of Family & Economic Issues, 42(1), 154–177. https://dx.doi.org/10.1007/s10834-021-09756-6
3LeBaron, A. B., & Kelley, H. H. (2021). Financial socialization: A decade in review. Journal of Family & Economic Issues, 42(1), 195–206. https://dx.doi.org/10.1007/s10834-020-09736-2
4Terriquez, V., & Gurantz, O. (2014). Financial challenges in emerging adulthood and students’ decisions to stop out of college. Emerging Adulthood, 3(3), 204–214. https://dx.doi.org/10.1177/2167696814550684
5Serido, J., & Deenanath, V. (2016). Financial parenting: Promoting financial self-reliance of young consumers. Handbook of consumer finance research, (pp. 291-300): Springer. https://dx.doi.org/10.1007/978-3-319-28887-1_24
6Shim, S., Serido, J., Bosch, L., & Tang, C. (2013). Financial identity-processing styles among young adults: A longitudinal study of socialization factors and consequences for financial capabilities. Journal of Consumer Affairs, 47(1), 128–152. https://dx.doi.org/10.1111/joca.12002
7LeBaron-Black, A. B., Saxey, M. T., Driggs, T. M., & Curran, M. A. (2023). From piggy banks to significant others: Associations between financial socialization and romantic relationship flourishing in emerging adulthood. Journal of Family Issues, 44(5), 1301–1320. https://doi.org/10.1177/0192513x211057536