Empirical measurement of the financial socialisation of children by parents

Abstract

PurposeThis paper aims to use the age of a child when pocket money is first received, a savings account is first opened and financial discussions between parent and child commence as factors to assess financial socialisation of children by parents in the home. The impacts on financial knowledge, attitudes and behaviour of young teenagers of each of the three age-related variables mentioned above were then examined.Design/methodology/approachUsing a questionnaire, data were collected from a sample of 1,247 14 and 15 year olds. Regressions were run to calculate how the ages children first received pocket money, had a savings account and started having financial discussions with parents correlated with impulsive spending behaviour, financial quiz scores, saving intentions and whether parents were seen as role models.FindingsFinancial discussions between parent and child were found to be an important influence on future financial knowledge, attitudes and behaviour. In addition, savings accounts can provide young teenagers with access to funds, which could be spent unwisely without associated financial awareness. Financial discussion in the home between parent and child was the most influential of the three factors examined. Putting money into a savings account and the giving of pocket money can provide further opportunities to engage in financial socialisation.Research limitations/implicationsLimitations of this study include the self-reported nature of the age variables. Future projects could use social research techniques, such as personal interviews of family members or keeping financial diaries. Rich qualitative data could further inform the findings of the current study.Practical implicationsEducational finance courses should include an objective of incorporating and stimulating financial discussions in the home, as talking about finances appears to be one of the most effective financial socialisation factors for children.Originality/valueWhile previous research has identified the process of financial socialisation, the originality of this paper is its examination of the influence of individual financial socialisation factors in the home on financial attitudes, knowledge and behaviour.