When asked where they get their information about finances, 57% of Wells Fargo’s teenage survey respondents said they learn about dollars and cents from their parents. But other sources of information, like school (47%), social media (35%) and online websites and articles (34%) are all having an influence.
They’re also having more of an influence than parents are aware of. Only 12% of the parents surveyed for the study believe their kids use social media for their financial education.
“There is a bit of a disconnection between parents’ and kids’ perceptions around financial education,” said Kathleen Malone, financial adviser with Wells Fargo Advisors in Charlotte, North Carolina. “It’s very important for families to discuss money — and for our next generation to understand how to handle their finances.”
Assessing just how complete that understanding is is a little difficult. While 69% of teenagers said they are good with money, 49% would give their investment knowledge a grade of D or F. But there was consensus in one key area: 93% of teens agree that learning about investing now will help them be more financially stable in the future.
So take heart, moms and dads. At least some of your kids are interested in becoming more financially literate. You can work with that.
One way to make the stock market more relatable to young minds is by talking about it in relation to your kids’ favorite brands. Think video games, clothing and snack food.
Some popular investing apps make this even easier by giving away free big-name stocks like Apple, Nike and Amazon.
A teachable moment
As a parent, allowing your kid to wander through social media for any length of time can be a nerve-wracking experience.
But if they’re reading about markets and money, at least their interest is piqued by something that could help them for the rest of their lives. Think of this as the perfect opportunity to talk to your kids, not just about their finances, but about where they get their financial information and how to evaluate it.
“Social media has a profound influence on our younger generations. Those generations grew up with social media and often trust many of the platforms more than their parents do,” says Mariana Martinez, family dynamics consultant with Wells Fargo’s Wealth & Investment Management group.
“It is vital to establish solid and open communication, create a shared purpose, and educate our children so that they are prepared for financial independence.”
A lot of parents appear to be doing just that. Three in five parents surveyed by Wells Fargo say they have talked to their teenagers about handling finances. But only 32% have had much of a discussion about investing.
It’s never too early to have that discussion, and it’s never too early for your kids to start investing their own money for their future.
And don’t think they need a lot of money to get started. Modern technology makes it easy for you and your kids to set up a balanced portfolio and make regular, automatic contributions — even if they only invest some “spare change”, it will grow exponentially over the years.
Start your child’s investment journey the right way
If you’re wary of the information your child might scrape together (and potentially misinterpret) online, there's no shortage of ways to help them get their feet wet investing without being dragged feet-first into the swamp.
Start with a financial literacy tool for kids — one that you and your children can learn from together.
Most important, though, is that you encourage your kids' curiosity and interest in one of life's most important aspects. Earning, saving and investing money are all keys to a prosperous and rewarding life. The earlier they develop the skills, the happier they're likely to be later on.