Study: 42% of Parents Aren’t Teaching Their Kids to Invest Long-Term

Kids pick up all sorts of habits from their parents — and money habits are no exception.

A growing body of research suggests that parents play a crucial role in shaping their children’s approach to personal finance, including investing. At the same time, financial firms are offering products and services to help parents teach their kids about investing, including through custodial accounts .

According to a survey from The Motley Fool, 50% of parents with kids at least 10 years old have already taught them about investing and another 38% plan to do so when they’re older.

The survey also found significant differences among the parents who teach their kids about investing when it comes to investing philosophies they pass down, tools they use to educate their kids, and more.

“Children are like sponges; they typically learn about money by observation and actions,” Nilay Gandhi, a certified financial planner and senior financial advisor at Vanguard Personal Advisor Services, told The Motley Fool. “By educating them early and frequently, it’s a good way to begin sharing parents’ vision, values and preparing the next generation for wealth, investing, roles and responsibilities.”

One marker of how parents approach teaching their kids about investing is whether they are investors themselves. Parents with investing experience are much more likely to teach their kids about investing, instill positive investing habits , and set up custodial accounts for their kids.

Read on for a deep dive into how parents are teaching their kids to invest. Key findings

Teaching early : 50% of parents with kids age 10 or older have already taught them about investing. Another 38% say they plan to teach their kids about investing when they’re older.

Missing class : 18% of parents don’t know if the school their kids attend offers personal finance classes and 34% know that their kids aren’t being offered a personal finance class.

Generational wisdom : 38% of parents say their family didn’t sufficiently educate them on investing; 46% say they weren’t properly educated in school

Passing down knowledge : Parents with investing experience are more likely to teach their kids about investing (93% vs 50% of parents without investing experience), teach their kids investing strategy (97% to 74%), and talk to their kids more frequently about investing.

Custodial accounts : 54% of parents have opened a custodial account to make investments for their kids. Overall, 26% of parents use custodial investment accounts to educate their kids about investing.

Half of parents with kids at least 10 years old have taught them about investing

Fifty percent of parents with kids that are at least 10 years of age have already taught them about investing and another 38% intend to teach them about investing when they’re older.

Just 13% don’t intend to teach their kids about investing. Do you teach or plan to teach your kid(s)about investing? No, I do not 13% I already have 50% Yes, when they’re older 38% A growing body of research into ” financial socialization ” supports the idea that parents play a fundamental role in shaping their children’s financial attitudes and behaviors throughout their lives. Given that, it’s encouraging to find the vast majority of parents are making an effort to teach their kids about investing. 80% of parents who educated their kids about investing did so before they were 18 years old

Among parents who have educated their kids about investing, 80% did so before their kids turned 18.

Most parents educate their kids about investing when they’re between 10 and 15 years old, though many start earlier or later. How old was your kid(s) when you taught them about investing? Younger than 10 years old 9% 10 to 12 years old 21% 13 to 15 years old 34% 16 to 17 years old 16% 18 years or older 20% Research has found that financial socialization — learning and observing financial behavior and habits — from parents has the largest impact when children are 17 years of age or younger. Parents with investing experience are more likely to teach their kids about investing

Ninety-three percent of parents with investing experience have either taught their kids about investing or plan to when they’re older, compared to just 50% of parents without investing experience.

The other 50% of parents who have never invested don’t intend to teach their kids about investing. No, I do not 7% 50% I already have 54% 20% Yes, when they’re older 39% 30% Parents that opt not to teach their kids about investing leave a gap in the financial […]

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