What mothers can teach their kids about money - KTTC Rochester, Austin, Mason City News, Weather and Sports

What mothers can teach their kids about money

© iStockphoto.com / Ozgur Donmaz © iStockphoto.com / Ozgur Donmaz

By Andrew Housser

When many people imagine reaping the wisdom of an older generation, they picture a father-knows-best moment. It is still true that more men than women manage their household’s financial planning – but the numbers are rapidly shifting. Today, 27 percent of married women manage their household finances alone, up from 14 percent a decade ago, according to a recent survey. Among women who are the higher earner in their household (44 percent of married women), 65 percent manage their household’s finances. Among women who earn less than their husbands, half share the responsibility for financial and retirement planning. 

As Mother’s Day approaches, we can look at how mothers can teach kids of any age about money. Here are a few of those ways.

1. Listen to your parents – including Mom. More than 70 percent of adults say they learned about the importance of saving from their parents. A 2015 survey reports that 75 percent of millennials say they would take financial advice from their mothers, compared to 52 percent of baby boomers. That advice might be paying off. A survey released earlier this year found that the millennial generation has increased its savings more than any other generation, saving 7.5 percent of income for retirement, compared to 5.8 percent in 2013.

2. Live within your means. In a Mother’s Day survey about financial advice, 55 percent of people said their mother encouraged them to be frugal. Moms are also well-remembered for teaching kids about sales, coupons and how to tell the difference between a want and a need. (A rule of thumb from some mothers: If nothing bad will happen if you do not buy the item, it is a want, not a need.) 

3. Let the best manager handle money. Good financial planning has no gender. A couple should not base task designations on gender, but on who is the better fit for the task. The best person to pay the bills (on time), for instance, is likely the person who is the most organized. The main money manager also should be the one who is least likely to overspend. But a couple also should have frequent discussions so both partners can discuss goals, understand their financial status, and know where financial records are kept. 

4. Prioritize long-term goals. Research shows that women are more likely than men to rank long-term goals, such as not outliving retirement savings, as very important. This is wise, because women live three to five years longer than men, on average. Fortunately for women, some studies have shown that women are better investors. One theory behind this is that women may be less likely to fall victim to overconfidence in making investment decisions. Whether you are a mom, dad, aunt, uncle or other, most advisors recommend saving at least 10 percent of their income for retirement. Consult a financial advisor if you are not certain if you are on track for a healthy retirement.

5. Plan to cover your family’s needs. A recent study found that 60 percent of women believe it is very important to support their family’s financial needs if something were to happen to them. In contrast, only 49 percent of men put this emphasis on their family. The common standard for life insurance coverage is to purchase coverage that would pay 10 times your income. However, many advisors today recommend 10 times your income, plus $100,000 for each child to cover college. If you have debt and a mortgage balance, add at least enough to cover those costs. And if one parent is a stay-at-home parent, consider including equal coverage on the stay-at-home spouse. 

Many people credit their mothers with other financial lessons. These include the value of saving for a goal, the worth of hard work and the importance of budgeting. This Mother’s Day, put those lessons to the test with a heartfelt thank-you to the woman who may have helped you secure your financial well-being, in addition to so many other gifts.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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