Just off the heels of National Financial Literacy Month, there are some worrisome findings: 40% of Americans do not keep a budget, and 40% have less than $1,000 in savings. A lack of financial literacy is a key factor, according to a survey just released by our team at The Penny Hoarder.
A third of the 1,500 survey respondents did not discuss basic personal finance topics while growing up, and only 13% talked about their own family's financial situation.
The result? Lower incomes, lower savings rates, less budgeting.
- Incomes: 18% of those who talked about money management at home report household income of less than $50,000. But for those who didn’t talk about money, 31% earn less than $50,000.
- Savings: 17% of those who discussed finances growing up have no savings at all. That figure balloons to 40% among those who had no early financial literacy.
- Budgeting: 33% of those who discussed finances growing up fail to keep a budget. That rises to 54% for those who did not discuss finances.
These numbers track with results from a financial well-being study by the Consumer Financial Protection Bureau in 2017. It showed, among other things, that people who didn’t discuss personal finance growing up were 12% more likely to consider themselves “just getting by financially.”
Bottom line: It pays to talk to kids about money and involve them in personal finance.
At The Penny Hoarder, our goal is simple—get people talking about earning and saving money. With our friends at Hancock Whitney, we’ve compiled a few basic ways to help you teach your kids about money.
- Open a savings account with them to teach them about banking, saving and interest. Show them how to make a deposit, and let them see the money grow over time.
- If you give them an allowance, let them make spending mistakes -- and learn from that. Set them up for success as adults.
- Talk openly about money around the dinner table. Make your kids feel comfortable about the topic.
- When they’re old enough, show them in more depth how to save money, including budgeting and goal setting.