Can We Talk About Money? Financial Socialization Through Parent–Child Financial Discussion

Abstract

This multigenerational, qualitative research study explores family financial discussion processes that may lead to better financial preparation for emerging adults. Interviews were conducted with 90 emerging adults from three universities as well as 17 of their parents and eight of their grandparents. Qualitative analyses revealed two major themes associated with family financial discussion processes. In Parent-Initiated-Discussions, principles were taught primarily through vertically-structured (top-down) delivery. Three concepts reported across all three generations of respondents included: (a) Sharing financial experiences; (b) Involving children in decisions; and (c) Engaging in ageappropriate conversations. In Child-Initiated Discussions, analyses revealed that financial principles were often taught in interactive, conversational, horizontal, and organic ways.Analyses identified two recurring concepts or contexts: (a) Children asking financial questions; and (b) Child-initiated, age-appropriate conversations. These results highlight healthy processes for family financial discussion that may better prepare emerging adults for financial adulthood and reduce financial instability.

Parent Financial Socialization Scale: Development and preliminary validation.

“…Parent financial modeling is defined as parent(s)’ enactment of financial behaviors as observed or recognized by their child (Rosa et al, 2018). Parent–child financial discussion is defined as verbal communication between parent(s) and their child about finances (LeBaron et al, 2020b). Experiential learning of finances is defined as “the process of using life experience to internalize [financial] knowledge” (LeBaron et al, 2019, p. 437).…”

Financial Socialization: A Decade in Review

“…In addition to the more implicit socialization that occurs as children observe parents' behavior, parents also engage in more explicit socialization. Research and theory from the past decade has typically conceptualized this in terms of parent-child financial discussion (Serido and Deenanath 2016), which can be defined as verbal communication between parent(s) and their child about finances (LeBaron et al 2020b). This may be the most studied method of family financial socialization.…”

Parental Financial Education During Childhood and Financial Behaviors of Emerging Adults

“…Overt financial education is synonymous with financial teaching, similar to that conducted in financial literacy courses. In the literature, this concept is also referred to as parent child financial discussion (LeBaron et al, 2018a;LeBaron et al, 2018c). Recent studies suggest that parent child financial discussion during high school is positively associated with concurrent financial knowledge (Chambers, Asarta, & Farley-Ripple, 2019;Deenanath, Danes, & Jang, 2019) and healthy financial behaviors (Deenanath et al, 2019).…”

“…In order to prepare future generations of emerging adults to enact healthy financial management behaviors, family financial socialization during childhood is key (Grinstein-Weiss, Spader, Yeo, Key, & Freeze, 2012;Jorgensen & Savla, 2010). Overt financial education (i.e., explicit and purposeful teaching of financial concepts) from parents may be a critical component of this socialization (Clarke et al, 2005;LeBaron, Hill, Rosa, & Marks, 2018a, 2018b, 2018c). By using a distinct dataset, the current study offers needed support for the solidification of overt financial education as a crucial component of financial socialization, specifically as a predictor of future financial behaviors.…”