Key takeaways
- U.S. adults who received a robust financial education in their youth are 1.5 times more likely to successfully negotiate salary increases throughout their careers, achieving rates of 66 percent as opposed to 39 percent for those without early financial exposure.
- Those with strong financial education backgrounds tend to adopt healthier financial habits as adults compared to their peers over the past year.
- Financial professionals encourage parents to start discussions about money with their children early to promote an ongoing dialogue about financial planning.
Julia Rothacker shares that discussions about finances at the dinner table are not common among many families, but they were a staple in hers.
At 31, Rothacker is the director of business and operations at Public, an investment application. She recalls her parents discussing essential topics like budgeting, college savings, and investing from a young age.
“I learned how to balance my long-term goals with my immediate desires,” Rothacker recalls. “When I would ask for a toy at the zoo, my parents would say ‘No,’ but they took the time to explain that their goal was to ensure my sister and I could attend the best colleges. They genuinely valued education as a financial objective.”
This foundational financial education continues to benefit Rothacker in adulthood, and she is not the only one.
Bankrate’s latest Financial Habits Survey reveals that a person’s upbringing plays a significant role in determining their future financial behavior. Individuals who received a comprehensive financial education in their youth were notably more adept at negotiating better salaries once they began their careers and adopted superior financial practices as adults.
I truly believe it’s crucial to initiate those money discussions. Doing so allows children to feel more confident about their finances.
— Jen Hemphill, accredited financial counselor and host of the “Her Dinero Matters” podcast
Exposure to financial education among Americans in their youth
Bankrate’s survey was designed to assess the financial experiences of Americans raised with a focus on financial education compared to those who were not. Participants answered nine questions regarding their financial experiences during their upbringing and were classified as having received a “strong financial education” if they responded “often” or “sometimes” to at least five of those nine questions.
Survey participants were asked whether they:
- Held a paying job before turning 18
- Applied for a part-time job
- Received an allowance for chores
- Managed a personal or joint bank account
- Budgeted for significant expenses
- Paid off a debt using their own earnings
- Studied personal finance in school (e.g., budgeting, savings)
- Discussed money matters with parents (including management and budgeting strategies)
- Invested in the stock market (including education about it).
A total of 46 percent of respondents indicated they had a strong financial education, while 54 percent did not. Additionally, we inquired about how these groups fared in salary negotiations and their financial behaviors over the previous year.
Percentages may be rounded throughout the article and may not sum to 100 percent.
Early financial education linked to successful salary negotiation
The survey, which collected responses from over 2,600 U.S. adults, revealed that individuals with diverse financial experiences during their youth, such as holding a part-time job or having a bank account, were 1.5 times more likely to have successfully negotiated a salary increase as adults (66 percent vs. 39 percent).
Among those with a strong financial education who have managed to secure pay raises throughout their careers, 66 percent reported negotiating a raise at least once every five to ten years, including 60 percent who did so every few years, 33 percent annually, and 10 percent who managed to negotiate more than once a year.
In contrast, those who received minimal to no financial education were substantially less likely to have successfully negotiated salary increases, with only 39 percent claiming to have done so. This group includes:
- 3 percent who negotiated raises more than once a year
- 17 percent who negotiated at least once a year
- 33 percent who negotiated at least once every few years
- 39 percent who negotiated at least once every five to ten years
Furthermore, 40 percent of Americans with little to no financial education stated they had never successfully negotiated a pay raise, in contrast to 22 percent of those with a strong financial background.
Why you should negotiate pay
Based on a Fidelity Investments study, nearly 60 percent of Americans accept the initial salary offer without negotiation, while 87 percent of those who did negotiate received at least some of what they requested . Successfully negotiating your salary helps ensure you are compensated fairly for your skills and lays a solid foundation for future earnings.
Individuals with a solid financial upbringing are more inclined to adopt healthy financial behaviors.
Although discussing money may seem like a sensitive subject in numerous households, breaking this silence can positively influence children’s financial practices as they grow up.
Those who experienced a financial education in their youth were also more likely than their peers to report practicing better financial habits over the last year (i.e., since January 2024).
For instance, survey respondents with a strong financial foundation were more inclined to say they paid their bills punctually (80 percent vs. 76 percent), saved for the future (57 percent vs. 43 percent), and invested in the stock market (29 percent vs. 18 percent).
How to start a budget
Financial experts suggest following these five steps to create your first monthly budget:
- Determine your monthly income
- Monitor your spending over a three-month period
- Consider your financial priorities
- Craft your budget (e.g., input your figures into a spreadsheet or budgeting app) and choose your budgeting method (e.g., 50/20/30 rule, zero-based budgeting, etc.)
- Track your expenditure and modify your budget as necessary
Men vs. women
The survey revealed that men were more likely than women to be classified as having received a robust financial education during their upbringing, with 50 percent of men versus 42 percent of women. Men also appeared to benefit more from this education.
Among participants raised with a financial education, 70 percent of men reported successfully negotiating pay raises in their careers, compared to 62 percent of women.
How to negotiate for a pay raise
To better understand a salary offer, inquire about how the figure was calculated and whether there’s room for negotiation. Assess what you deserve based on your skills and experiences, and be ready to substantiate your desired amount. During negotiations, utilize market data and industry discussions to support your claims. Practicing your pitch in front of a mirror or with a friend can also enhance your chances of success.
The survey highlighted that men with strong financial education were slightly more inclined than their female counterparts with similar backgrounds to exhibit healthy financial habits over the past year. The comparison between the two groups follows:
“I now value the essential lesson about financial responsibility taught by my parents.”
Kathleen Meanor, a senior account manager at Bankrate, expresses gratitude for her parents’ open talks about money and financial responsibilities during her upbringing.
While in middle school, Kathleen’s parents helped her set up a credit card and checking account. She discovered her entrepreneurial spirit by walking neighbors’ dogs, necessitating a safe place to store her earnings. After earning her first $100, she allocated $40 for personal use and deposited the remainder.
“Wells Fargo was where I opened my first bank account,” she recalled. “At first, I had a difficult time because I wanted to spend all of it, but I have grown to appreciate the important lesson my parents instilled regarding financial responsibility.”
During high school, when she began driving and got her first job, she applied the same principles, setting aside 20 to 30 percent of her paycheck for personal expenditures while saving the remaining amount. She also developed the habit of budgeting each month, meticulously tracking her spending on items like takeout, coffee, and gas.
“Although these were small expenditures, this practice taught me to keep tabs on my monthly spending habits,” Meanor explained.
It also equipped her with the necessary knowledge to save for significant financial goals. Over recent years, Meanor has managed to save up six months’ worth of expenses in her emergency fund, which she accessed last year when faced with unexpected costs, like veterinary bills and required roof repairs for her townhouse in Charlotte, North Carolina. This financial cushion prevented her from slipping into high-interest credit card debt.
“This year, I have to decline more travel invitations and be more prudent with my spending due to last year’s expenses,” she noted. “Overall, I aim to live beneath my means and save.”
How parents can engage in financial discussions with their children
Financial advisors Jen Hemphill and Jamie Bosse shared strategic advice on how parents can consistently encourage financial literacy in their children.
Create teachable moments from real-life situations
When teaching children about money, it’s important to involve them in discussions as much as you can, according to Hemphill and Bosse. Hemphill, a certified financial counselor and host of the “Her Dinero Matters” podcast, suggests that parents don’t pressure themselves into having formal monetary discussions but instead seize everyday opportunities to teach.
“Incorporate finance discussions while grocery shopping or during outings with your kids. Transform these moments into teaching opportunities, like explaining how to compare prices while shopping for socks,” she said.
Hemphill advises making it feel like a reciprocal conversation: share financial concepts with your kids, while also posing questions to gauge their understanding. “This approach lets you identify areas they grasp fully and where they might need further clarification,” she stated.
Bosse, a financial planner at CGN Advisors in Manhattan, Kansas, emphasizes the importance of turning ordinary experiences into financial lessons and participating in activities with your children that involve learning about money. She highlights that making financial education enjoyable for kids is essential.
“You can make it fun,” Bosse asserted. “Consider reading a money-themed book, engaging in a financial board game, or participating in activities that incorporate real-life examples.”
Adapt financial literacy discussions based on age
When it comes to teaching financial literacy to children, a uniform approach doesn’t exist. What’s crucial is that parents create an atmosphere in their homes that encourages open discussions about money from an early age, which will manifest differently in each family.
Bosse, the author of “Money Boss Mom” and “Milton the Money Savvy Pup,” advises parents to personalize any money discussions or activities based on their child’s age. For younger children aged three to five, start with basic lessons such as understanding that money is a tool for purchases and that earning money comes from work.
For children aged 9-12, it’s advisable for parents to emphasize the significance of saving money and also introduce the concept of utilizing a bank account to safeguard their cash. Once children enter their teenage years, deeper financial topics like paycheck processing, taxes, credit scores, and future investment strategies are suitable for discussion.
Free financial literacy resources
If you’re on the lookout for downloadable games, worksheets, and coloring pages that focus on budgeting, saving, and other financial themes, Bosse has curated several valuable resources.
Throughout this financial literacy journey, Hemphill and Bosse also recommend presenting kids with chances to gain hands-on experience in earning and managing their finances, whether tied to paid tasks or not. The debate around allowances has long existed, with some parents questioning the appropriateness of linking financial rewards to essential duties at home, while others find it beneficial.
“When it comes to whether to give an allowance, that’s a decision individual families should make,” Hemphill noted. “Part of it involves understanding your children’s motivations. For some, an allowance may serve as a strong incentive, while for others, it may not.”
A strategy parents may consider is implementing a give-save-spend piggy bank system. Hemphill suggested that this method is particularly effective for younger children to encourage thoughts around budgeting, saving, and setting financial goals. When children receive money, whether from the tooth fairy or as part of a monthly allowance, parents should discuss optimal ways to allocate these funds. Hemphill recommends attaching specific goals to the savings rather than simply instructing children to save.
“Guide them on saving a percentage of their income, whether it’s 10 or 20 percent. Being clear about the purpose of their savings or the rationale behind investing is also essential,” Hemphill explained.
It’s never too early or too late to start discussing money
A key takeaway from Hemphill and Bosse is that it’s never too late to initiate money conversations with your children. Many parents often hesitate to talk about finances because they consider it a taboo subject or feel anxious about money matters.
Additionally, many parents think that their imperfections in financial management disqualify them from teaching their children about money. However, Hemphill and Bosse encourage parents to dispel this silence as soon as possible and reshape generational notions about finances. Sharing past financial missteps and the lessons learned can be valuable for children.
“If your children are heading to college, perhaps it would have been better to discuss money matters earlier, but the next most advantageous time is now,” Bosse said. “Mistakes and failures can serve as powerful learning opportunities. Frame mistakes as chances for growth alongside your children.”
