Financial socialization is like preparing for and hiking a steep mountain for the first time: daunting and unfamiliar at first. Financial socialization is the process of achieving financial capability; in other words, it is the journey of gaining knowledge, skills, and behavior related to effectively managing resources and making financial decisions.1 While hiking, like during financial socialization, you may need guidance from others—or hiking buddies—to know the best way forward. Additionally, there may be forks in the road that require turning to trail guides for assistance. With the right gear—or right financial knowledge and guidance—emerging adults can confidently face their financial future, like reaching the mountain summit. Dr. Melissa Curran and colleagues highlight three key roles played in the sharing of financial knowledge during this adventure: the role of parents aka “trail guides,” partners aka “hiking buddies,” and the personal role you take to guide themself.2
The Parent Role: Trail Guides for Financial Success
Parents are like experienced trail guides, showing their children the ropes. This may include helping their children know how to handle credit or save money. Just as guides lead hikers with their past knowledge, parents teach their children financial habits through being a good example and then letting them try it out for themselves. To be a good example, parents can avoid excess spending, be transparent about financial choices, and pay bills on time. To provide valuable financial experiences, parents can integrate into the child’s socialization allowances and chores, encourage participation in charitable giving, involve kids in grocery shopping, and have discussions about money. Parents help pave the way by instilling in children positive financial habits such as budgeting, saving, and investing, which ultimately contribute to a healthier financial future or “smoother terrain.” And the hike doesn’t end when children turn 18. Studies show that when emerging adults communicate regularly with their parents about money, they experience less financial stress and have greater overall well-being—both factors leading to more positive development.7 Emerging adults can continue to turn to their parents, as appropriate, as they navigate the “financial trail.”
The Partner Role: Hiking Buddies for Financial Support
While parents provide guidance, partners often offer more support and teamwork on the journey. Just like a hiking buddy, a partner offers support every step of the way, a constant source of direction and reassurance. When people become committed romantic partners, it is healthy for them to transition to greater independence from parents, with increased closeness and shared decision-making with each other instead; this natural transition heightens the partner’s influence.5 But, just like hiking partners who can misdirect or fail to provide adequate assistance to the hiker, not all relationships are smooth. Research reveals that frequent financial conflict between partners can lead to dissatisfaction, hostility, and strain on the relationship—like injury on a trail.3 Such symptoms may manifest through negative emotional states like depression and marital distress.3 Couples who manage their finances together and communicate openly tend to have healthier, more stable relationships. In fact, better financial practices in relationships often lead to greater life satisfaction and relationship satisfaction.
The Personal Role: The Lead Financial Influence
Beyond advice from parents or partners, the most important aspect of your financial hike is your own financial behavior—how well you manage resources and make financial decisions. Positive indicators include living within a budget, setting financial goals, investing early, avoiding debt, and saving adequately. Emerging adults today are taking longer to hit traditional checkpoints like buying a house or getting married and often rely more on parents for financial guidance.6 The lengthening transition to financial independence is possibly exacerbated by a lack of adequate financial learning; this may necessitate greater reliance on partners to help fill in the gaps in your own education.6 Although it is a good idea for committed partners to be a financial team, in order to be an equal partner within that team you must have the necessary knowledge and skills. With more financial knowledge and better financial habits, individuals can become more capable and less reliant on parents or partners (even if you choose to be a financial team with your partner, which is usually a good idea). Building financial capability during emerging adulthood is crucial for reaching your personal summit of financial independence.9
Now, we have a clearer understanding of how financial socialization works and have highlighted the vital roles that parents, partners, and personal knowledge play in conquering your mountain of financial independence. Financial socialization is not a trail you can hike on your own.
Takeaways for Parents, Partners, and Emerging Adults
So, what does this mean for all involved? Whether at the beginning of the journey or already conquering the trail, here is how each group can contribute to the climb of financial socialization:
For Parents
● Expect less involvement: If your usually communicative child is seeking your financial advice less often, that’s a good sign. It may mean they’re becoming more confident, independent, and capable.
● Trust their choices: Their “financial trail" may look different than it did for you, so let your child adjust their path as needed.
● Stay available: While they’re gaining independence, your child may still need your advice on bigger financial decisions like mortgages or retirement savings, so make sure they know they can still come to you with questions.
For Partners
● Don’t underestimate your influence: An accessible and supportive partner can significantly enhance well-being, life satisfaction, and relationship quality.10
● Give it time: Relationships get stronger as they grow, so be patient as you both navigate your financial journeys together.8
● Communicate openly: Discuss financial goals and concerns regularly to create a sense of security and shared purpose.4
For Emerging Adults
● Stay determined: You have the skills to succeed—keep going, and you’ll reach the top of the mountain. Create small and achievable goals to move forward.
● Take responsibility: Start by getting a job, making mistakes, and learning. Financial independence and capability take time, but it will pay off in the long run.
● Stick to the basics: Budgeting, paying bills, saving, and investing are key to managing your money as you progress.
In conclusion, emerging adults can navigate their financial journey by improving their capabilities, seeking advice from parents when needed, and working with their partners; regardless of what role you play, you can succeed. While the pace may be slower than previous generations, with the right mindset and guidance, emerging adults can still become capable of reaching the summit of financial independence.
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1Authority, F. I. R. (2010). Financial Capability in the United States: National Survey, Executive Summary. Washington, DC http://www. finrafoundation.org/resources/research/p120478.
2Curran, M. A., Parrott, E., Ahn, S. Y., Serido, J., & Shim, S. (2018). Young adults’ life outcomes and well-being: Perceived financial socialization from parents, the romantic partner, and young adults’ own financial behaviors. Journal of Family and Economic Issues, 39(3), 445–456. https://doi.org/10.1007/s10834-018-9572-9
3Dew, J., Britt, S., & Huston, S. (2012). Examining the relationship between financial issues and divorce. Family Relations, 61, 615– 628. https://doi.org/10.1111/j.1741-3729.2012.00715.x
4Dew, J. P., & Stewart, R. (2012). A financial issue, a relationship issue, or both? Examining the predictors of marital financial conflict. Journal of Financial Therapy, 3(1). https://doi.org/10.4148/jft.V3i1.1605
5Erikson, E. H. (1950). Childhood and society. New York: W. W. Norton.
6Fingerman, K. L., Kim, K., Davis, E. M., Furstenberg, F. F., Jr., Birditt, K. S., & Zarit, S. (2015). “I’ll give you the world”: Socioeconomic differences in parental support of adult children. Journal of Marriage and Family, 77, 844–865. https://doi.org/10.1111/jomf.12204
7Moschis, G. P. (1985). The role of family communication in consumer socialization of children and adolescents. Journal of Consumer Research, 11(4), 898–913.
8Ross, D. B., O’Neal, C. W., Arnold, A. L., & Mancini, J. (2017). Money matters in marriage: Financial concerns, warmth, and hostility among military couples. Journal of Family and Economic Issues, 38, 572–581. https://doi.org/10.1007/s10834-017-9522-y.
9Serido, J., Shim, S., & Tang, C. (2013). A developmental model of financial capability: A framework for promoting a successful transition to adulthood. International Journal of Behavioral Development, 37, 287–297. https://doi.org/10.1177/0165025413479476.
10Xiao, J. J., Chatterjee, S., & Kim, J. (2014). Factors associated with financial independence of young adults. International Journal of Consumer Studies, 38(4), 394–403. https://doi.org/10.1111/ijcs.12106