The Financial Topics Parents Aren’t Talking to Their Kids About
The holidays are a time for families to get together and share joy and thankfulness. But they’re also a time for mom or dad to probe their adult children about all kinds of “fun” topics like who they’re dating, when those grandkids will be on the way, when they’re going back to school for that master’s degree, and—you guessed it—how they’re dealing with money.
We wanted to learn more about the conversations parents have with their adult children around money, so we surveyed 1,003 parents in the United States—ages 36 to 65—during the month of November, and found some surprising results.
We found that parents are openly talking to their kids about money, and that’s great. But student loans and credit card debt significantly trail other financial topics by a wide margin.
In our survey, only 8% of parents felt credit card and student loan debt are the most important financial topics to discuss with their children, while 48% felt saving followed by budgeting (39%) were the top priorities.
But there’s no question that debt is impacting many Americans, especially the younger generation. This year, credit card debt in the U.S. surpassed $1 trillion , while student loan debt surpassed $1.5 trillion across 44 million borrowers.
In fact, our survey also found that a majority of parents (66%) fear that if their children are bad with money, they’ll be stuck living paycheck-to-paycheck or that they won’t be able to afford a home (36%).
Here are five tips to share with your millennial kids that can help them prepare for sustainable financial futures:
Controlling Student Debt Before it Controls You
An American defaults on a student loan approximately every 29 seconds , but you can help your children understand the financial implications of their degree.
Write down each student loan, whether it’s federal or private, the interest rate, and the required monthly payment. Take the opportunity to educate your children on the cost of interest over the life of their student loans.
Make sure they know about income-driven repayment plans, which can (in some cases) reduce payments to no more than 10% of the government-calculated discretionary income for federal student loans. You can also explain the benefits of refinancing student loans with a private lender, like SoFi.
Investing so Your Money Makes Money
Investing is one smart way to grow your savings. Unfortunately, it’s also one of the most misunderstood financial topics and can cause unnecessary stress and anxiety. Just getting started can be the single biggest hurdle.
But with all the investing apps and online services out there now, there’s no reason why your adult child can’t get started today.
Young adults can begin their investing journey by taking advantage of an online platform like SoFi Wealth. They can start investing with SoFi Wealth with as little as $100. Plus, they will have access to human advisors to help talk through any questions they may have about investing.
Establishing Healthy Spending Habits
The discipline of setting money aside and delayed gratification are powerful habits to encourage early on. Ask your children about what they’d like to accomplish over the next few months and years. Explain how establishing recurring savings for this goal can help make it a reality while still funding other, necessary financial goals.
Make sure your children have access to a bank account with low minimum deposit and balance requirements that they can use to build a savings cushion. You could even challenge your child to transfer a small amount of cash into the account every time they get paid. It’s perfectly fine to start with small amounts!
Becoming a Good Credit Risk
Establishing a good credit history is one factor that can help recent grads become financially credible to lenders when it’s time to take out an auto loan or apply for a mortgage. Akin to grade point averages on school transcripts, recent grads should have a clear understanding of the role credit scores, and credit in general, plays in their lives.
You can help by teaching them that the right way to use a credit card is to pay off the balance in full each and every month, while earning rewards or cash back for purchases when they can.
Not paying off your balance in full can lead to paying interest on next month’s bill and potentially even lowering your credit score . You can also explain factors like debt-to-income ratio, hard vs. soft credit pulls, and the implications of closing an account .
Making a Difference with Your Dollars
Many recent grads are passionate about social issues and causes. Allocating a percentage of their hard-earned dollars into a “giving bucket” can result in a multiplier effect—where both giver and receiver benefit.
Instead of buying material possessions this holiday season, you could advocate for your children to give back. Gifting your children a small amount to donate, even $10 to $20, can go a long way. This is a great way to teach how powerful money can be, so they can develop a greater appreciation of all the uses that money can be put to, beyond today’s spending on wants.
Do they still have questions? A great way to get them up to speed with their finances is for them to talk to a SoFi financial planner. They can work with your college-age children to help formulate a plan about their financial future.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit .
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
The opinions and analysis expressed here are those of Alison Norris as of December 3, 2018. These views may change as market, economic, and other conditions change. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA /SIPC .