As a senior financial planner with money manager T. Rowe Price, Stuart Ritter spends much of his time on the job - and off - educating people about personal finance.
Here's his advice as it relates to parents and their children.
Q: T. Rowe's recent survey found half of parents don't regularly save for retirement, nearly 1 out of 5 expect to financially lean on children in old age and parents are more likely to save for a vacation than a child's college education. What does that say about parents and finances today?
A: Like our time, our money is pulled in a lot of directions - and sometimes we get so caught up in handling the short term that we end up neglecting the long term.
Focus on what's important by sitting down and listing your financial goals - what you want to buy, when you want to buy it, and how much it will cost when you do. Everyone's list is different, but they always end up with more stuff we want than money we have.
And that leads to the critical next step in the process: prioritizing. What's more important to you and what's less? Really. If saving for college is more important than a vacation, it should be higher on the list - and your spending should reflect that. It doesn't necessarily mean no vacation; it may just mean a smaller vacation so you can set money aside for college.
Q: Surveys for years have shown that teens flunk tests on personal finance basics and that some traditional methods parents use to teach children about money matters - unconditional allowances and buying stock for children - don't improve financial literacy, either. So, how can youngsters learn to be financially savvy - and how can those lessons be made to stick?
A: First, to teach kids to be good drivers, we don't start by explaining transmission gear ratios. We teach them the basics about how a car works and the rules of the road. So in teaching them to make good decisions about money, we should do the same thing. Start with the basics: how to set financial goals, prioritize, and save and spend wisely. When you get to investing, focus on the fundamentals like asset allocation and diversification.
Second, the best way to make it stick is to bring it into everyday conversations, whether at the grocery store or paying bills online, as well as put it all in a fun game so kids will want to learn. That's part of why T. Rowe Price collaborated with Walt Disney Imagineers to create The Great Piggy Bank Adventure, a free online board game. You can find it at moneyconfidentkids.com.
Q: You have three small children, ages 8, 6 and 3. How have you gone about teaching them about money?
A: Like most other things we teach our kids about - safety, playing nicely, eating well - we use everyday teachable moments.