December 23, 2010

Kids ‘Clueless’ About Family Budgets and Charitable Giving, Poll Finds

Holidays are a good time to teach lessons in finance, philanthropy, says Northwestern Mutual

Family budgets are under a fair amount of strain, especially during the holidays. This is especially true these days, given the current tough economic conditions and the fact that some 40% of adult children who’ve graduated from college (so-called Boomerang Kids) are living at home, according to Monster.com.

Fortunately for some families, the U.S. Congress included special funding of the Pell Grant program as part of a bill that it recently passed to finance the federal government through March 4.

In addition, groups like Northwestern Mutual Foundation are working to spread the word on how financial literacy can help kids of all ages take more responsibility for their financial futures and for charitable giving.

"Kids who are taught about the importance of giving as well as budgeting responsibly for giving are better prepared to secure their own financial futures,” said financial literacy expert and Northwestern Mutual Senior Vice President Meridee Maynard, in a press release.

“It appears that parents aren’t proactively modeling and discussing their giving strategies, which would be a great learning opportunity for their children,” she explained.

In a recent survey, Northwestern Mutual found that the majority of children, 64%, had no idea how their parents support charitable organizations or causes.

“Parents have good charitable intentions, but if they don’t discuss them with their kids, a valuable learning opportunity is lost,” said Maynard. “Planning how to give is just as important as the planning that goes into saving, spending and investing. These are early [lessons] that can help young people become financially-savvy adults.”

Key Points for Parents

“The holiday season is the perfect time for parents to assess how they’re modeling and explaining charitable giving to their kids in the context of the family’s overall financial security plan,” Maynard shared.

She encourages parents to:

  • Involve kids in conversations about your charitable giving. Develop giving goals as a family. During the holiday season, choose a charity to financially support as a family. Model – and explain – how the family will budget to meet that giving goal.
  • Show kids that money isn’t just for spending. Use a four-bank system: for saving, spending, investing and giving.
  • Encourage kids to develop realistic personal giving goals to support a cause they believe in.
  • Explain to teens the concept of tax benefits related to charitable contributions.
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