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T. Rowe Price: Parents Show No Reluctance To Overspend On Kids But Are Reluctant To Discuss Money With Them

Parents, Kids & Money Survey finds that while parents worry about spoiling kids, they often overspend on them and defund family financial essentials, such as retirement savings and emergency funds

Parents are more inclined to discuss money with boys than girls and are more likely to say it’s because boys need more help


T. Rowe Price’s 2016 Parents, Kids & Money Survey, which sampled 1,086 parents of 8 to 14 year olds nationally and their kids, found that parents’ reluctance to discuss money with their kids has not translated to a reluctance to spend it on them. Nearly half of parents (46%) have gone into debt to cover something their kids wanted, and many say they spend too much on things their kids do not need (57%). Yet most worry about spoiling their kids (58%), and many kids have come to expect their parents to buy them what they want (57%).

When asked how often they take advantage of teachable moments that occur throughout the day to discuss financial topics, less than half of parents (44%) take advantage of the opportunity to discuss money with their kids most of the time. And while many parents have some reluctance to discuss family finances (71%), they tend to talk to boys more about money than girls. When asked why, one of the top reasons given was that boys need more help with money.

Stuart Ritter, CFP®, a senior financial planner at T. Rowe Price and father of three, noted, “It’s always fun to throw elaborate birthday parties and see our kids’ faces light up when we buy them the most coveted toy in the store, but the cost isn’t worth it if we’re jeopardizing our families’ financial security and causing anxiety. We do ourselves and our kids a disservice by not living within our means and funding long-term goals such as retirement.

“Parents are likely to find that investing their time in having money conversations with their kids will have a far greater impact on their kids’ lives long after the latest gadget or toy is discarded. We know that many kids are talking about money with their friends often and even lending it to each other. They’re learning about money, even if parents aren’t discussing it. And it’s important that they learn the right money lessons.”

T. Rowe Price encourages parents to invest in their kids' futures by talking to them about money matters weekly. The survey found that parents who discuss financial topics with their kids at least once a week are nearly twice as likely to have kids who say they are smart about money (68% vs. 36%). To help, the firm created, which provides free online games for kids; tips for parents that are focused on financial concepts such as goal setting, spending versus saving, inflation, asset allocation, and investment diversification; as well as lessons for educators.



  • Most parents have some reluctance to discuss financial matters with their kids: 71% of parents have at least some reluctance to discuss financial matters with their kids, while 29% are very or extremely reluctant.
  • But many kids are not reluctant to discuss money with their friends: 44% of kids agree with the statement, "My friends and I talk about money a lot." Conversations are being translated into actions, as nearly half of kids (47%) have lent money to their friends. Only 15% were not paid back.
  • Nearly as many parents are uncomfortable discussing family finances as they are death: 58% of parents said they have some discomfort discussing family finances with their kids. Only slightly more (59%) said they have some discomfort discussing death with them.
  • And when parents are uncomfortable discussing money, kids know it: 35% of kids say their parents are uncomfortable talking about money with them.
  • Less than half of parents take advantage of teachable moments most of the time: When asked how often they take advantage of the opportunities that occur throughout the day to talk to their kids about financial topics, only 44% of parents said they do at least most of the time.
  • Using market volatility and account statements as teachable moments: 20% of parents have discussed market volatility with their kids and 19% have shown their financial statements to their kids.
  • Parents talk to their boys more about money…but only because they think their boys need more help: Of the 561 parents who have kids of both genders, 30% indicated that they talk to their boys about money more, while 46% said there was no difference and 24% said they talk to their girls more. When asked why they speak with one child more about money than the other, one of the top reasons given by the parents who talk with boys more is because they need more help with money (43% vs. 30%).
  • Parents keep a close eye on their kids' money: 83% of parents say they keep a pretty close eye on their kids' money and what they're doing with it. In fact, nearly half of parents (46%) decide what to do with their kids’ gift money.
  • Some parents do not share financial information with their significant others: 41% of parents agree with the statement, "I keep financial secrets from my spouse/partner."



  • Nearly half of parents have gone into debt for something their kids wanted: 46% of parents have gone into debt to pay for something their kids wanted.
  • Many parents say they spend too much on things their kids do not need: 57% of parents agree with the statement, "I spend too much money on my kids for things they don't really need."
  • More than half of parents worry that they spoil their kids: 58% of parents agree with the statement, "I worry that I spoil my kids."
  • And kids expect their parents to buy them what they want: 57% of kids agree with the statement, "I expect my parents to buy me what I want."
  • Allowance can be expensive: 79% of kids receive an allowance. Within that group, 20% of kids receive an allowance of more than $20 per week. Kids began receiving an allowance at an average age of eight.
  • Birthdays come with big price tags: 41% of parents spent $200 or more on their child’s birthday presents in the past 12 months. The same percentage (41%) spent $200 or more on their child’s birthday party in the past 12 months.
  • Parents are not always using emergency funds for emergencies: 55% of parents have used their emergency funds to cover non-emergencies, including day-to-day expenses (24%), paying off debt (22%), kids' education (20%), and daycare/childcare (13%).
  • Most have insufficient emergency funds: 72% of parents do not have sufficient emergency funds to cover at least three months' worth of living expenses, including 49% who do not even have an emergency fund. T. Rowe Price recommends having an emergency fund large enough to cover at least three to six months of living expenses in the event of an unanticipated need.
  • A surprising percentage have pay day loans: 9% of parents have pay day loans. The average balance of their pay day loan is $2,291 (median: $1,000).



  • Parents mistakenly prioritize college savings over retirement savings: When asked which is a higher priority for you and your family, 67% of parents said that saving for their kids' college education was more important than saving for retirement.
  • Many are using retirement savings to fund other non-urgent priorities: 44% of parents have used their retirement savings to fund non-emergencies during the past two years, including paying off debt (17%), vacation (17%), kids’ education (16%), and day-to-day expenses (15%). In fact, retirement funds are more likely to be tapped for non-emergencies than emergencies. 37% have tapped retirement savings to cover emergencies, including health care costs (16%), home repair or renovation (15%), car purchase or repair (13%), taxes (12%), and covering expenses while unemployed (10%). While some parents may have tapped retirement savings for multiple reasons, a small 8% of parents have tapped retirement savings for only emergencies. 48% of parents have not tapped retirement savings during the past two years.
  • Discussing retirement savings makes many parents anxious: 60% of parents agree with the statement, "Conversations about saving for retirement usually fill me with a lot of anxiety."
  • They do not know how much to save for retirement: 53% of parents agree with the statement, "If I save 6% of my income toward retirement, I'll have enough money to comfortably retire at age 65." T. Rowe Price recommends investors save at least 15% of their income toward retirement, including any company match, in order to potentially replace 75% of their preretirement income.
  • Parents would rather go into debt than pull from retirement: 67% of parents would rather go into debt than pull money from a retirement account if faced with a financial hardship that they couldn't otherwise cover. In fact, if faced with a hardship, many would rather use credit cards (42%), ask family or friends for money (38%), or take a personal loan (24%) before tapping retirement savings (22%).
  • Low knowledge about the benefits of using Roth IRAs: Only 35% of parents correctly identified a Roth IRA as "a way to save for retirement where you contribute after-tax money." T. Rowe Price research suggests that Roths, either an IRA or 401(k), may be a more effective way for most investors to save for retirement compared with a Traditional IRA or 401(k).
  • But parents have notable earning potential: There is a high level of educational attainment among parents, as 66% have a higher education degree, including 12% who have attained an associate’s degree, 33% who attained a bachelor's degree, and 21% who attained a graduate degree. Their human capital potential could better poise them for their savings priorities.


About the Survey

The eighth annual T. Rowe Price Parents, Kids & Money Survey, conducted by MetrixLab, Inc., aimed to understand the basic financial knowledge, attitudes, and behaviors of both parents of kids ages eight to 14 and their kids ages 8 to 14. The survey was fielded from February 4, 2016 through February 11, 2016, with a sample size of 1,086 parents and 1,086 kids ages 8 to 14. The margin of error is +/- 3 percentage points. All statistical testing done among subgroups (e.g., boys versus girls) is conducted at the 95% confidence level. Reporting includes only findings that are statistically significant at this level.

About T. Rowe Price

Founded in 1937, Baltimore-based T. Rowe Pricee Group, Inc. ( is a global investment management organization with $763.1 billion in assets under management as of December 31, 2015. The organization provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The company also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price's disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. For more information, visit troweprice.comTwitterYouTubeLinkedIn, or Facebook.