How Affluent Parents Are Teaching Their Children About Finances: BofA

Parents are providing more financial support for their children in light of the pandemic, and are committed to imparting more financial knowledge than they received growing up, according to a new study from Bank of America.

The independent market research firm Concentrix conducted a panel-sample online survey from Oct. 28 to Nov. 5 among 2,000 affluent respondents across the U.S., including 1,456 current and future parents. Respondents 18 to 24 had investable assets between $50,000 and $1 million; older respondents had investable assets between $100,000 and $1 million.

Thirty-one percent of parents surveyed said they are financially supporting their children more now than they did before the pandemic. Current and future parents are willing to pay major expenses and for life events, such as their college education and wedding, but are less likely to do so for everyday expenses.

Seventy-seven percent of parents said they plan to stop financially supporting their children after they reach certain milestones, including once their children have obtained a good salary, according to 30%, and started a first job, 27%.

Seven in 10 current and future fathers and 66% of mothers said they expect to receive assistance in their later years from their children. The most common things they expect their children to help them with are small acts of service, such as fixing something in the house or helping with taxes, treating them to dinner or drinks and taking them shopping.

Baby boomers and older parents were least likely among survey participants to expect help from their children later in life.

Among those who do anticipate receiving help from their children, most limit expectations to small acts of service rather than covering medical expenses or finding/paying for an adult care center.

Passing Down Financial Knowledge

More than half of both affluent parents and non-parents in the survey said their parents taught them the basics of finance, including how to find bargains, save money, write checks and balance a checkbook, prioritize when low on money, open accounts and set a budget.

Their parents also taught them how to manage credit cards and credit card debt and how to save and invest for retirement.

Parents today want to pass similar financial lessons along to their own children, though at a significantly higher rate, according to the survey.

Nine in 10 current and future parents said the most important lessons they want to teach their children are how to save money and find bargains, manage credit cards and credit card debt, write checks/balance a checkbook, save and invest for retirement, prioritize when low on money and set a budget.

Overall, 83% of parents said they had had open discussions with their children about their finances, whereas only 51% had similar conversations with their own parents growing up.

Fifty-eight percent of fathers reported that their parents had openly discussed their family's financial status when they were children, compared with 45% of mothers. And fathers were likelier to say their parents would discuss specific amounts.

The survey also found that men were often taught more about financial topics than women, including investing in stocks, bonds and mutual funds, making good decisions in a down market and finding a financial advisor.

Despite this gap in investing knowledge, women today feel strongly about passing these financial lessons on to their own children. Nine in 10 said they will teach their children how to save money, find good bargains, manage credit cards and credit card debt, and how to save and invest for retirement.

Starting a Family

Six in 10 survey participants who plan to have children said the cost of having children is a key consideration. However, 33% of aspiring parents said cost is one of many important considerations, compared with 23% who said it is the most important one.

Sixty-one percent of current parents said the costs of raising children exceeded their initial expectations, compared with 36% who said the cost was about what they had expected and only 3% who said it was less expensive.

Many parents in the survey said they would have planned differently had they known the true costs of having children.

Of this group, 48% wished they had saved more money, 32% that they had been more organized in planning and 20% that they had gotten more advice from their parents before starting a family.