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April 13, 2011

Mom, Dad, Your Children Are Watching
Your Financial Manners

A Smith College study of the financial knowledge, attitudes and behavior of 4,600 college-educated women found that, for better or for worse, parents have the greatest influence on their children's financial attitudes.

NORTHAMPTON, Mass. – Parents have significant influence on their children’s financial attitudes whether or not the topic is ever explicitly discussed within the family, according to a new Smith College study.

Regardless of their degree of financial knowledge, seventy-eight percent of the 4,600 college-educated women studied indicated that parents – more than society, politics or religion – had an important role in shaping their attitudes about money management. Yet fewer than 50 percent of participants said their parents ever spoke to them about finances.

“Whether you know it or not, your children are taking their money cues from you,” said Mahnaz Mahdavi, professor of economics and the study’s lead researcher. "For better or for worse, parents have the greatest influence."

By investing in their own financial knowledge and exhibiting responsible financial behavior, parents could have a lasting positive influence on their children’s financial future, Mahdavi said.

After absorbing their parents attitudes, where do educated women turn for financial information? Researchers found different answers according to the participants’ degree of financial knowledge. “It is really a vicious or virtuous cycle,” said Mahdavi.

Participants who had higher levels of financial knowledge said they turned to their employment resources as well as financial press and financial professionals, which would then add to their knowledge.

Those who were less financially savvy said they relied on sources such as their colleagues, family or friends, according to Mahdavi, who found that those sources had a negative impact on the participants’ understanding of financial matters.

This is the first part of a comprehensive study that is based upon a survey of Smith alumnae conducted in fall 2009. Because women comprise about half of the labor force in the United States, examining educated women’s financial knowledge, habits and attitudes not only has the potential to benefit women but the economy as a whole.

Mahdavi is the current and founding director of the Smith College Women and Financial Independence program, which provides women with the skills and knowledge necessary to address financial matters that may arise in their personal, professional, family and community lives.


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Garrison Hall
Northampton, Massachusetts 01063

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