September 18, 2019

Parents Just Don’t Understand (Finances): 3 in 5 Americans Rely on Uncertain Parents for Financial Guidance

More than half of Americans say parents influence the way they manage finances; yet, not all parents feel confident investing in the stock market, paying off student loans or preparing for retirement. 

BLOOMINGTON, Ill. –There’s nothing more convenient than a call to mom or dad for a quick gut check on important financial matters, but do they always know best? A new survey from COUNTRY Financial® found that while 61 percent of Americans consider parents a key influence in shaping the way they manage their finances, parents of kids under age 21 lack confidence in a number of personal finance topics, with 46 percent giving their level of financial literacy a grade of C or lower.

In fact, not all parents reported feeling confident when it comes to managing a 401(k) (53 percent), planning for retirement (61 percent) or taking out and paying off student loans (55 percent). The skill parents felt least confident in was investing in the stock market (33 percent).

In spite of parents’ lack of confidence around certain financial topics, most Americans selected parents (32 percent) over partner/spouse (16 percent), internet sites and blogs (12 percent), a financial advisor (12 percent), or school classes (8 percent) as the resource they turn to the most to learn about managing finances.

“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,” said 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.”

Americans lack financial literacy & education

Americans’ reliance on their parents for matters of managing personal finances might be a reflection on the lack of financial education available to them in school—a deficit that could also be impacting parents’ level of confidence regarding certain financial topics.

In fact, 52 percent of parents and 52 percent of Americans overall reported not having received any financial education in K-12 or college, with only 15 percent of Americans overall reporting feeling “very prepared” to manage their personal finances once they left college and entered adulthood.

An astonishing 86 percent of Americans believe that financial education classes should be mandatory for K-12 schools nationwide.

Vital topics not discussed at home

The survey found that parents’ lack of confidence in certain personal finance skills might impact the conversations they have (or are not having) with their kids. When asked what personal finance topics they had broached with their kids, only 13 percent of parents said they had talked to their kids about planning for retirement, while 9 percent had talked to them about managing student loans. Saving (78 percent) and budgeting (52 percent) were far more popular topics of discussion, as the majority of parents (93 percent) had also reported feeling confident managing a bank or savings account (download the full chart (PDF).

When given the option to do something other than talk to their kids about finances, parents said they would rather go to the dentist (39 percent), talk about the birds and the bees (36 percent) or pay a speeding ticket (6 percent).

“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.”

The effect on millennials & Gen Z

Considering that Americans mostly rely on their parents as a resource for personal finance education, it may not come as a surprise that parents’ lack of confidence and hesitancy to talk to about personal finances affects how confident their kids – millennials and members of Gen Z – feel when faced with the same topics.

Nearly half (48 percent) of 18-34-year-olds say they felt somewhat or not at all prepared to manage their finances when entering adulthood. Consistent with the weaknesses reported by parents, only a few are confident in investing (20 percent), planning for retirement and managing a 401 (k) (32 percent), or taking out and paying off student loans (43 percent). By contrast, 80 percent are confident managing a bank account.

Media contact

news@countryfinancial.com