A new study from T. Rowe Price provides a look at how the coronavirus pandemic has impacted families’ financial well-being, compelling more parents than ever to have conversations regarding money matters with their children. Further, the study shows how the pandemic has exacerbated existing racial inequalities, including the racial retirement savings gap.
T. Rowe Price’s 13th annual Parents, Kids & Money Survey, which sampled more than 2,000 parents and their 8- to 14-year-olds, reveals insights into the pandemic’s impact on different families. The findings suggest that parents feel increased urgency on the need to have money conversations with kids.
In evidence that the pandemic has furthered racial inequalities, Black, Hispanic, and Asian parents were more likely than their white counterparts to report that the pandemic had a negative impact on their financial well-being. Black and Hispanic parents found themselves more than twice as likely to reduce retirement savings versus increasing it and more than twice as likely to reduce college savings.
“It’s unfortunate and concerning, albeit not that surprising, to learn from the study that the pandemic has impacted many families’ financial well-being. That it has compounded the drivers of the racial wealth gap is incredibly disappointing and an indication that there is much work to be done to address this over the long term,” says Jerome Clark, strategic program manager in T. Rowe Price’s Multi-Asset Division and father of two.
“The one silver lining is that parents are having more conversations with kids about money. Kids often pick up on unspoken cues, and stressful situations can be turned into powerful teaching tools. Our research shows that kids who have had frequent money conversations with their parents are better positioned for financial responsibility in adulthood. T. Rowe Price’s Money Confident Kids® program is particularly well suited to support such conversations given its emphasis on helping kids understand long-term investment concepts and that wealth-building is a long-term endeavor,” Mr. Clark says.
T. Rowe Price’s annual Parents, Kids & Money Survey has consistently shown that there is an opportunity for all parents to have more money conversations with their kids. To help parents discuss money with their kids, the firm created MoneyConfidentKids.com, which provides free online educational games, classroom lessons for educators, and tips for parents that are focused on financial concepts, such as goal-setting, spending versus saving, inflation, asset allocation, and investment diversification.
PARENTS ARE TALKING TO THEIR KIDS ABOUT MONEY MORE THAN EVER
FAMILIES’ FINANCIAL WELL-BEING IS STRAINED BY THE PANDEMIC
THE RACIAL WEALTH GAP IS EXACERBATED BY THE PANDEMIC
MONEY CONFIDENT KIDS is a registered trademark of T. Rowe Price Group, Inc.
ABOUT THE SURVEY
The 13th annual T. Rowe Price Parents, Kids & Money Survey, conducted by Dynata, aimed to understand the basic financial knowledge, attitudes, and behaviors of both parents of kids ages 8 to 14 and their kids ages 8 to 14. The survey was fielded from January 25, 2021, through February 5, 2021, with quotas of approximately 49% men and 51% women. A total of 2,023 parents of children aged 8 to 14 in the U.S. participated in the representative sample, and the sampling error for the representative sample is +/-2.1% at the 95% confidence interval. In addition, a separate oversample of multiple ethnic groups who are parents of children aged 8 to 14 in the U.S. was completed to provide more depth of analysis. The ethnic oversample (n=1,018) included African-American/Black parents (n=215); Hispanic/Latino or Spanish-origin parents (n=238); Asian parents (n=219); and other ethnic parents (American Indian, Alaskan Native, Native Hawaiian, or other Pacific Islander (n=404). All statistical testing done among subgroups is conducted at the 95% confidence level. Reporting includes only findings that are statistically significant at this level.
ABOUT T. ROWE PRICE
Founded in 1937, Baltimore-based T. Rowe Price Group, Inc. (NASDAQ-GS: TROW), is a global investment management organization with $1.52 trillion in assets under management as of March 31, 2020. The organization provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The company also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price's disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. For more information, visit troweprice.com or our Twitter, YouTube, LinkedIn, Instagram, and Facebook sites.
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