Personal finance

How can I help my child’s future relationships? Teaching personal finance

Parents who hope their children will grow up to have a thriving romantic relationship can lay the groundwork in a perhaps unexpected way: they can teach their children healthy financial principles and behaviors.

A new study from BYU shows that kids who learn money management tips like saving and budgeting from their parents are more likely to have “thriving” romantic relationships as young adults.

The survey, which covered nearly 2,000 young adults aged 18 to 30 in a romantic relationship, has just been published in the Family Matters Diary.

No one is surprised that good financial behaviors help kids manage their money when they start earning it. But the study is one of the first to look at the impact of those same behaviors on romantic relationships, said lead author Ashley LeBaron-Black, assistant professor at Brigham Young University’s School of Family Life.

LeBaron-Black said it’s important for parents to do three things to build their children’s financial literacy:

  • Lead by example so they see the principles of money management lived, not just discussed.
  • Have deliberate conversations about money, including conversations about different techniques to help with finances, including saving and budgeting and paying for things on time.
  • Provide experiences that empower kids to make financial decisions and build good habits.

One of the study’s other findings surprised even the researchers, LeBaron-Black told Deseret News. While childhood knowledge about money, which has evolved into healthy financial habits, has improved romantic relationships, financial distress doesn’t prevent relationships from flourishing overall.

Experienced Benefits of Money Intelligence

LeBaron-Black has studied for several years the impact of financial knowledge transmitted by parents on children. She knows that the lessons her parents taught her stimulated her as a young adult. The Deseret News reported on a 2018 study she collaborated on in the Financial advice and planning journal which showed that the price of poor financial management goes far beyond failure to build wealth. “Poor health, school stagnation, problematic interpersonal and family relationships, and reduced likelihood of transitioning effectively into adulthood” are among the potential outcomes.

This study showed that parents who teach their children about finances give their children more money-related skills and independence for life. The article stated, “Their children will have less debt as adults, more savings and better credit scores. They will be less likely to fall behind on loans, including mortgages, and will have higher net worth as adults. Good money management can even contribute to better self-esteem and better physical and psychological well-being, according to the study.

Emma Kratz-Bailey, 24, of Provo, Utah, is counting on it. She and Taylor Bailey have been married for almost two years and they’re not stressing too much because they know how much they have right now and they’ve talked about how they’ll get through the ups and downs of what’s likely to come. fluctuate income and expenses. as she works on a civil engineering degree. For now, he’s the main wage earner, an independent contractor who helps people file claims for work-related injuries and illnesses. She is a part-time student and research assistant planning to pursue graduate studies.

These plans are based in part on the financial principles she started learning when she was 8 or 9 years old. She remembers her parents talking about money in elementary school in a very general way, but hitting her first turning point when the iPod with video came out. It was expensive – around $300. And she really wanted one. Her parents, Greg and Stacey Kratz, encouraged her to save pocket money and chores and if she saved enough, they said they would give her $50.

“I was super motivated to do this,” she said, “because I had already learned how saving your money will help you be able to do bigger fun things later, rather than doing little things. fun now. It was a huge reward. I loved having that iPod.

By the time she was a teenager, working at a sandwich shop and helping teach piano on the side, she was addicted to savings. When she went on a mission for The Church of Jesus Christ of Latter-day Saints, she had raised about $5,000, which later came in handy when she got married and returned to school. ‘university.

She learned about money, she said, in the two talks her parents had with all of their children and in casual side-by-side conversations. But seeing them “really live this way and do this with their money is what strengthened my ideas.”

When she thought having a dollar meant she had to find something to spend it on, her mother nonchalantly encouraged her to hang on to it for something better.

“I still forget that one sometimes,” Kratz-Bailey notes with a chuckle. “But I find that budgeting and tracking my money now honestly helps me feel less stressed about money.”

She said knowing how much she has to spend on groceries and other necessities “definitely translates” to less stress in her marriage. And she got another sage advice from her parents: “When you’re married, make sure you communicate with each other and be on the same page when it comes to money.”

What the study found

When researchers looked at how those in romantic relationships learned about finances — if they were taught at all — they specifically considered two possible reasons for the link to thriving: financial distress and financial behaviors.

“Interestingly, although financial socialization tends to be associated with less financial distress later on, and we found this link, there was not this aspect of mediation or indirect effects with distress. financial. So it doesn’t help explain why financial socialization impacts relationships,” LeBaron-Black said.

Behaviors, on the other hand, were really influenced by how their parents taught them about money. And it helped their relationships.

The study didn’t show any causal links, but the researchers have theories, starting with the obvious notion that better financial health simply puts less strain on a relationship. LeBaron-Black also thinks there’s a good chance that people who have developed the habits and skills associated with good financial behaviors – which require both discipline and effort – are the kind of people who would put also these efforts and care in the relationship.

She underlines the study considered flourishing, not satisfaction. They are not the same. Relationship satisfaction is a calculation centered on me: am I happy? Can I do better? Florissant captures the health of the relationship, Lebaron-Black said. “Are we both better to be in his relationship? How connected are we? Does it help us grow as people? »

If they had looked at satisfaction, she says, financial distress might have made a difference. But when money gets tight and bills pile up, people can still grow and benefit from each other. “It might even help them learn to overcome difficult things together,” LeBaron-Black said.

As for the surprise that financial distress hasn’t impacted a relationship’s blossoming, she said it could come down to averages. Financial stress brings some couples together as they battle it, but tears others apart. Perhaps the number of couples in each situation has evened out. Or it could be because young adulthood is a time in life where financial distress might be “kind of expected, so people don’t see it as a liability in their relationship,” LeBaron-Black said. . Young adults don’t make a lot of money. They might have student debt. So what?

We can worry a lot about financial behaviors, like being an impulsive spender or not paying bills. Simply put, you don’t want a partner who doesn’t pay rent and buys a car instead, but having college debt or not earning a lot of money is somewhat expected at this age.

No reason not to teach

The resources parents have shouldn’t determine how much or if they teach children about money, LeBaron-Black said, though it can impact what parents know and how they model. behaviors. Those who have a financially difficult life might have more experience with the challenges and put more emphasis on teaching their children.

“I don’t think it’s accurate to say that high-income families are more successful at teaching their kids about money. I think a lot of low-income families do very well. I try to tell parents in general that whatever their situation, parents have a responsibility to teach their children about money as best they can. You don’t have to be an investment banker to teach your kids basic sound financial habits. They are going to need this knowledge to succeed as independent adults.

A semester of personal finance at school won’t come close to replacing the day-to-day and ongoing influence parents have on a childhood. Children learn the most from this example. But instead of letting attitudes and values ​​be learned implicitly, she recommends having deliberate and explicit conversations and teaching moments.

The study did not examine the type of financial education of the unquestioned romantic partner or whether it made a difference. LeBaron-Black said it’s safe to assume it’s better to have one partner who understands good financial behavior than two who don’t. But she notes that it can create a mismatch in attitude and financial values. Savers and spenders can butt heads.

The study’s other authors are Matthew T. Saxey and Toby M. Driggs of BYU and Melissa A. Curran of the University of Arizona.