The COVID-19 pandemic has forced many Americans to boost their financial literacy and take stock of their financial situations — and a new survey shows that parents are sharing that knowledge with their children.
The 13th annual Parents, Kids & Money Survey from T. Rowe Price found that, perhaps due to the financial strain caused by the global crisis, parents are talking to their children about money more often than they did before.
The survey from the Baltimore-based investment management firm also showed that the health crisis has disproportionately impacted the financial well-being of families of color, further widening the U.S.’s racial wealth gap.
Amid pandemic-era financial issues, families are talking about money more than ever
The survey found that more families are talking about money today than in years past. In fact, 43% of parents and 44% of children cited an increase in these conversations over the past year.
Additionally, 47% of families are having these discussions at least once a week. In previous T. Rowe surveys dating to 2017, this figure was never above 34%.
The urgency and frequency of these conversations may be triggered by parents' current financial situations. Seventy-nine percent of respondents said they saw a medium or high change in their financial well-being during the pandemic — 67% of whom reported a negative impact. Four in 10 parents said they’re making less money, followed by:
- 35% who are saving less for other goals
- 29% who are saving less for retirement
- 27% who are saving less for college
Parents also noted increases in their credit card debt (34%) and medical costs (33%).
These changes are affecting family dynamics as well: More than half (52%) of children said their parents were more stressed, while more than 4 in 10 parents (42%) said they’re having more arguments about money.
Similarly, a survey from the American Institute of CPAs showed that married or cohabiting couples are having more money disputes during the pandemic — and that parents are having more of these disagreements than non-parent couples.
Racial wealth gaps widen, especially for Black and Latino families
Although the Parents, Kids & Money Survey found that families across the board have been financially impacted by the current health crisis, some communities have felt its impact more strongly than others.
T. Rowe Price’s survey revealed that among families who were financially impacted at a high or medium level, parents of color were more likely to see negative financial impacts from the pandemic than white parents. In fact, 78% of Asian parents reported this, compared with:
- 77% of Latino parents
- 74% of Black parents
- 65% of white parents
Compared to white families, families of color also reported reduced income at greater rates, led by Latino families (51%) and followed by:
- Black families (50%)
- Asian families (47%)
- White families (38%)
Black and Latino parents were also more than twice as likely to reduce their retirement and college fund contributions than they were to increase them:
- 37% of Black parents decreased retirement savings, versus 14% who increased them
- 35% of Black parents decreased college savings, versus 11% who increased them
- 35% of Latino parents decreased retirement savings, versus 14% who increased them
- 34% of Latino parents decreased college savings, versus 14% who increased them
In comparison, about 1 in 4 white families decreased their college or retirement savings while roughly the same amount increased them. This indicates the disproportionate impact that the pandemic is having on some of the most vulnerable communities, especially when it comes to retirement and education savings.
A survey from Nationwide Retirement Institute supported these findings, showing that Black families with caregiving duties during the pandemic were worried that additional expenses would prevent them from providing for their children (33%) and saving for retirement (30%).
Methodology: T. Rowe Price's 13th annual survey was conducted by Dynata between Jan. 25 and Feb. 5, 2021, with the participation of 2,023 American parents of children ages 8 to 14, as well as their kids.
In addition, an oversample was completed involving more than 1,000 American parents of color, broken down as such: