We do not all start with a perfect knowledge of what to do with our finances, I know I did not. Our financial knowledge and behaviors are affected by the people we are surrounded by. What we learn about finances during adolescence will affect our future financial behaviors. In a study conducted across multiple locations, Dr. LeBaron-Black and other researchers studied how parents, peers, employment, and media impact financial habits. Which one do you think has influenced you the most? In the study, they found that parents had the greatest influence on financial behaviors.[1] They also found that learning about money from parents and employment helped emerging adults develop good financial habits, while learning about money from peers and media encouraged bad financial habits.
Financial Influences
Parents
My parents are the ones I tell everything to. They are people I look to for advice as well as people I simply enjoy talking to! At the same time, I have had moments where they wouldn’t be the first person I would go to for advice, almost like a rollercoaster of a relationship. I am sure a lot of us can relate to either end of the spectrum. Either way, when we interact with our parents, they are often an example to us when it comes to financial habits like spending and saving money. From the time kids are little to the time they leave the house, children observe their parents and learn from what they model, especially with money management. “Young adults who reported learning about money from their parents demonstrated better financial behaviors and outcomes compared to those who did not receive parental guidance on finances (Financial Industry Regulatory Authority, 2015).”[2]
Peers
As we grow up, our friends become a bigger part of our lives. If you are anything like me, my friends become as if they were family. However, that does not mean that they benefit us financially. The older we get as teenagers, the more we go to our friends for help and advice. Their influences encourage less responsible spending behaviors.[3] They recommend purchases and encourage materialism, and for some reason… We often listen. Did your friends say they like those shoes that you love? The next step might be to just buy them.
Employment
Like many other people, the teenage years are when many get their first job. I know for me, the second I turned sixteen, I wanted all the independence that a young girl and a new driver’s license could get, and that meant getting a job. Employment can provide opportunities for learning how to responsibly manage not only your time but also your own money, promoting financial stability and responsible decision-making.
Media
“Although few emerging adults report media as their primary source of financial learning, about one-third of college students use media to seek out financial information.”[4] There are forms of media that can be either negative or positive. Some examples of this negative media would be celebrity culture or influencer marketing. This is negative, because it may set unrealistic standards and encourage excessive consumerism. Positive examples of media could be educational content or forms of community support. Overall, when media is how a young person learns about their finances, they have an increased desire to purchase, increased desire for brand recognition, increased level of materialism, and increased amount of spending.[5] These negative outcomes develop from the visuals of advertisements, but also from desiring what others have and they do not have.
Takeaways
- Capitalize on parents as your primary source of financial learning.
Parents play a crucial role in teaching emerging adults about finances. They lead by example and directly impart knowledge on topics like budgeting and saving. This guidance lays a strong foundation for responsible money management. By instilling important values and skills, parents help their children navigate financial decisions with confidence as they grow into independence. Emerging adults can actively engage with their parents about financial matters, asking questions and seeking guidance on budgeting, saving, and investing.
- Gain hands-on experience to prepare you for your future.
Having a job in high school helps adolescents learn important skills like time management and responsibility. It also teaches them about money and the value of hard work. This experience sets them up for success as they approach adulthood by giving them practical skills and a strong work ethic. Adolescents and emerging adults can actively seek out part-time jobs, internships, or volunteer opportunities during high school and college. They can use these experiences to not only earn money but also develop valuable skills such as communication, teamwork, and problem-solving.
- Be wary of the influence of peers and media on your spending habits.
Peers and media can negatively influence emerging adults’ financial habits, promoting impulsive spending and debt. Social pressures and unrealistic portrayals on platforms like social media make it difficult to prioritize saving and responsible financial decisions. Emerging adults can actively seek out positive influences (like educational content and community support) and surround themselves with friends who share similar financial values and goals. They can also limit their exposure to social media platforms that promote excessive consumerism and unrealistic lifestyles or follow accounts on social media that promote healthy financial lifestyles.
References:
[1] LeBaron-Black, A. B., Kelley, H. H., Hill, E. J., Jorgensen, B. L., & Jensen, J. F. (2023). The influence of parents, peers, employment, and media on spending behavior of emerging adults. Journal of Financial Counseling and Planning, 34(1), https://doi.org/10.1891/JFCP-2021-0036
[2] Financial Industry Regulatory Authority. (2015). Financial capability in the United States: Report of findings from the 2015 National Financial Capability Study. https://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf
[3] LeBaron-Black, A. B., Kelley, H. H., Hill, E. J., Jorgensen, B. L., & Jensen, J. F. (2023). The influence of parents, peers, employment, and media on spending behavior of emerging adults. Journal of Financial Counseling and Planning, 34(1), https://doi.org/10.1891/JFCP-2021-0036
[4] Lyons, A. C., Scherpf, E., & Roberts, H. (2006). Financial education and communication between parents and children. Journal of Consumer Education, 23, 64–76.
Norvilitis, J. M., & MacLean, M. G. (2010). The role of parents in college students’ financial behaviors and attitudes. Journal of Economic Psychology, 31(1), 55–63. https://doi.org/10.1016/j.joep.2009.10.003
Pinto, M. B., Parente, D. H., & Mansfield, P. M. (2005). Information learned from socialization agents: Its relationship to credit card use. Family and Consumer Sciences Research Journal, 33(4), 357–367. https://doi.org/10.1177/1077727X04274113
[5] Buijzen, M., & Valkenburg, P. M. (2000). The impact of television advertising on children’s Christmas wishes. Journal of Broadcasting & Electronic Media, 44(3), 456–470. https://doi.org/10.1207/s15506878employmentem4403_7
Churchill, G. A. Jr, & Moschis, G. P. (1979). Television and interpersonal influences on adolescent consumer learning. Journal of Consumer Research, 6(1), 23–35. https://doi.org/10.1086/208745
Moschis, G. P., & Churchill, G. A.Jr (1978). Consumer socialization: A theoretical and empirical analysis. Journal of Marketing Research, 15(4), 599–609. https://doi.org/10.2307/3150629