Parents Teaching Kids Money Values

According to a recent survey by American Express, 71% of parents with children between the ages six and 16 say their children understand that we are in a recession. This number suggests that talks about the current economic environment are happening at kitchen tables across the country. The survey also reveals that 91% of parents say they are committed to instilling lessons of financial responsibility upon their children in 2010.

Not only are America's youth attuned to the country's economic downturn, some are even internalizing a sense of responsibility for the family budget, says the report. One in five children has indicated to a parent that "maybe we shouldn't buy that due to the recession." Interestingly, 31% of the kids of the affluent were most apt to suggest that a parent hold back on a particular purchase.

More than nine in ten parents will be focused on offering valuable financial instruction in 2010. The top lessons are as follows:

• Understanding of debt and its impact on saving and spending (30%)
• Teaching the value of a dollar through reward systems like an allowance (25%)
• The basic teaching of how money is earned and used in everyday life (21%)

Pamela Codispoti, American Express SVP, Cardmember Services. "... parents seem to be seizing the opportunity to teach kids the ABCs of money... to help them grasp the financial basics... from saving to spending to management of debt."

For many parents providing an allowance is part of the financial education process and another way to raise their children's money management IQ. Other financial awareness activities include:

• 62% of parents in the general population give their children a weekly allowance. The average amount given is $12, or an average of $48 per month
• 47% of parents give an allowance with the expectation that it will be spent rather than saved
• 23% give an allowance for kids to spend however they please and put no restrictions on what it is for
• 13% give an allowance for kids to spend on weekly non-essentials; i.e. movie tickets, toys, games, etc
• 10% give an allowance for kids to spend on weekly essentials; i.e. gas, lunch money, etc
• 32% say the primary reason for giving an allowance is to reward their children for school grades or household chores
• 18% give an allowance specifically to be deposited into their children's savings account or piggy bank

Parents are sometimes known for telling children to do as they say, not as they do. But, US consumers are setting a goal to save money during 2010, according to the American Express Tracker. 89% of the general population has set a clear financial goal for the year, and 83% has a specific savings strategy in place, with a goal of saving on average $14,000 by December 2010.

In addition, parents appear to be setting a good example through action as well as words, notes Marketing Charts. As reported in Retailer Daily, US consumers increased their earnings and savings at a rate beyond their spending in December 2009, according to the monthly Bureau of Economic Analysis Personal Income and Outlays report.

For additional information about the sixth American Express Spending & Saving Tracker survey in a monthly series, go here, and for more about personal consumption expenditures, please visit Retailer Daily here.

 

Correction: In Monday's Research Brief, the first sentence has been corrected to properly attribute savings growth to a number of Coupons.com outlets rather than simply the Grocery iQ smartphone app as we mistakenly reported.