July 5, 2022

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How can I help my child’s future relationships? Teach personal finance

Parents who hope their children will grow up to have a flourishing romantic relationship can lay the groundwork in a perhaps unexpected way: They can teach their children sound financial principles and behaviors.

A new study from BYU shows that children who learn money management tips like saving and budgeting from their parents are more likely to have “flourishing” romantic relationships as young adults.

The survey, which included nearly 2,000 young adults 18 to 30 who are in romantic relationships, was just published in the Journal of Family Issues.

No one’s surprised that sound financial behaviors help kids manage money when they start to earn it. But the study is one of the first to look at the impact of these same behaviors on romantic relationships, said lead author Ashley LeBaron-Black, an assistant professor in the School of Family Life at Brigham Young University.

LeBaron-Black said it’s important for parents to do three things to bolster their children’s financial knowledge:

  • Set an example so they see money management principles lived, not just discussed.
  • Have deliberate conversations about money, including conversations about different techniques to help finances, including saving and budgeting and paying for things on time.
  • Provide experiences that let children make financial decisions and form solid habits.

One of the study’s other findings surprised even the researchers, LeBaron-Black told the Deseret News. While money knowledge gleaned as a child that turned into healthy money habits improved romantic relationships, financial distress doesn’t keep relationships from flourishing overall.

Lived perks of money smarts

LeBaron-Black has studied how parent-imparted financial knowledge impacts children for several years. She knows that the lessons her parents taught her gave her a boost as a young adult. The Deseret News reported on a 2018 study she collaborated on in the Journal of Financial Counseling and Planning that showed the price of mismanaging finances reaches well beyond not building wealth. “Poor health, academic stagnation, problematic interpersonal and family relationships and reduced likelihood of moving into adulthood effectively” are among potential results.

That study showed parents who teach their kids about finances give their children more money-related capability and independence for life. The article noted: “Their kids will have lower debt in emerging adulthood, more savings and better credit scores. They will be less likely to fall behind on loans including mortgages and will have higher net worth as adults. Good money management may even contribute to higher self-esteem and better physical and psychological well-being, the study said.”

Emma Kratz-Bailey, 24, of Provo, Utah, is counting on that. She and Taylor Bailey have been married nearly two years and they don’t stress too much because they know how much they have right now and they’ve talked about how they will weather the ups and downs of what’s likely to be fluctuating income and expenses as she works on a degree in civil engineering. For now, he’s the primary wage earner, an independent contractor helping people file claims for work-related injuries and illnesses. She’s a student and part-time research assistant who plans to go to graduate school.

Those plans are built in part on the financial principles she started learning when she was 8 or 9. She remembers her parents talking about money in grade school in a very general way, but hit her first turning point when the iPod with video came out. It was spendy — about $300. And she really wanted one. Her folks, Greg and Stacey Kratz, encouraged her to save her allowance and chore money and if she saved enough, they said they’d kick in $50.

“I was super-motivated to do that,” she said, “because I’d already had lessons about how saving your money will help you to be able to do bigger fun things later, rather than doing smaller fun things now. It was a huge payoff. I loved having that iPod.”

By the time she was a teen with a job at a sandwich shop and helping teach piano on the side, she was hooked on saving. When she left for a mission for The Church of Jesus Christ of Latter-day Saints, she’d socked away about $5,000, which came in handy later when she married and headed back to college.

She learned about money, she said, in both sit-down talks her parents had with all their children and in casual, side-by-side conversations. But it was seeing them “actually live that way and do that with their money that reinforced ideas for me.”

When she thought having a dollar meant she ought to find something to spend it on, her mom casually encouraged her to hang onto it for something better.

“I still forget that one sometimes,” Kratz-Bailey notes with a chuckle. “But I find that budgeting and keeping track of my money now helps me to honestly feel less stressed about money.”

She said knowing how much she has to spend on groceries and other needs “definitely does” translate into less stress in her marriage. And she got another piece of sage advice from her folks: “When you are married, being sure to communicate with each other and be on the same page as far as money goes.”

What the study found

When the researchers looked at how those in romantic relationships were taught about finances — if they were taught at all — they specifically considered two possible reasons for the link with flourishing: financial distress and financial behaviors.

“Interestingly, even though financial socialization does tend to be associated with less financial distress later, and we found that link, there wasn’t that mediational aspect or indirect effects going on with financial distress. So that doesn’t help explain why financial socialization impacts relationships,” LeBaron-Black said.

Behaviors, on the other hand, were really impacted by how well their parents had taught them about money. And that did help their relationships.

The study didn’t show causal links, but the researchers have theories, starting with the obvious notion that better financial health simply puts less strain on a relationship. LeBaron-Black also thinks there’s a good chance people who have developed the habits and skills associated with good financial behaviors — which take both discipline and effort — might be the kind of people who would put that effort and care into the relationship, too.

She points out the study considered flourishing, not satisfaction. They’re not the same. Relationship satisfaction is a me-centric calculation: Am I happy? Can I do better? Flourishing captures the health of the relationship, said Lebaron-Black. ”Are we both better for being in his relationship? How connected are we? Is it helping us grow as people?”

Had they looked at satisfaction, she said, financial distress might have made a difference. But when money’s tight and bills pile up, people can grow and benefit from each other anyway. “It might even help them learn to work through hard things together,” LeBaron-Black said.

As for the surprise that financial distress didn’t impact whether a relationship flourishes, she said it might come down to averages. Financial stress draws some couples closer as they battle it, but tears others apart. Maybe the number of couples in each situation balanced out. Or it could be because young adulthood is a point of life when financial distress might be “kind of expected, so people don’t see it as a liability in their relationship,” LeBaron-Black said. Young adults don’t make a lot of money. They might have student debt. So what?

One might care very much about financial behaviors, like being an impulsive spender or not paying bills. Put simply, you don’t want a partner who skips paying rent and instead buys a car, but having student debt or not making a lot of money is somewhat expected at that age.

No reason not to teach

The resources that parents have shouldn’t determine how well or if they teach children about money, LeBaron-Black said, though it can impact what parents know and how they model behaviors. Those with a financially difficult life might have more experience with challenges and put more emphasis on teaching their children.

“I don’t think it’s correct to say that high-income families do better at teaching their kids about money. I think a lot of low-income families do really well. I try to tell parents generally that no matter what their circumstances are, parents have a responsibility to teach their kids about money as best they can. You don’t have to be an investment banker to teach your kids basic healthy financial habits. They’re going to need that knowledge to be successful as independent adults.”

A semester of personal finance in school won’t come close to replacing the ongoing, daily influence parents have over a childhood. Kids learn the most from that example. But instead of letting the attitudes and values be implicitly learned, she recommends having purposeful and explicit conversations and teaching moments.

The study didn’t look at what kind of financial education the unsurveyed romantic partner had or if that made a difference. LeBaron-Black said it’s safe to assume that having one partner who understands good financial behavior is better than two who don’t. But she notes it can create a mismatch in financial attitude and values. Savers and spenders can butt heads.

Other study authors are Matthew T. Saxey and Toby M. Driggs of BYU and Melissa A. Curran of the University of Arizona.

https://www.deseret.com/2022/1/16/22884291/byu-study-says-romantic-relationships-flourish-if-parents-teach-children-personal-finance-skills