A new study conducted by COUNTRY Financials has arrived in the middle of a surge of reports lamenting the prevalence of financial illiteracy. The massive survey simultaneously suggests that the majority of young people rely on their parents to learn how to navigate expenses and that these parents are severely lacking in fiscal acumen.
It’s not easy talking green
Forty-six percent of parents with children 21 years old or younger would grade their financial literacy with a C or lower. Forty-seven percent felt unconfident about their knowledge of 401ks, 39% felt the same way about saving for retirement, and only 33% of parents felt informed about investing in the stock market. This is especially troubling considering that the average American derives their financial wisdom from their parents more than their partners or spouse (16%), internet sites and blogs (12%), financial advisors (12%) and school classes (8%.)
“Parents have the benefit of having real-life experience that has helped them to sharpen their personal finance skills, but most are not going to be experts in every topic,” explains Tim Harris, Executive Vice President at COUNTRY Financial. “Whether you’re a parent or not, it’s important to educate yourself in all of the ways finance affects your life, from the day-to-day management of budgets and loans to planning for the future. Consider consulting with a financial expert who can build your confidence and help to fill in those gaps.”
More than half of respondents in the study (and the American population at large actually) never received a formal financial education. It stands to reason that only 15% of Americans felt prepared to manage their finances when they came of age. Even though the majority of parents have not received a proper education, they are willing to impart the erroneous things they know to their children, even if they hate doing so. Thirty-nine percent of parents said they would rather go to the dentist than talk to their kids about money, 36% of parents said they would rather talk to their kids about the birds and the bees and the remaining said they would rather pay a speeding ticket.
“It’s great to see that most parents are talking with their kids about saving and budgeting,” Harris added. “However, planning for retirement and managing student loans are equally if not more important topics to discuss with your kids. Take simple steps such as enrolling in online courses, community classes or visiting a representative to educate yourself fully on these topics and prepare your kids for a more financially secure future.”