Learning to Navigate the Financial World: Financial Socialization in the Wake of the Great Recession

• In Event: 475 - Section on Children and Youth Paper Session. Transition to Adulthood during Hard Times

Abstract

Gaining financial independence is considered a key component of the transition to adulthood. Yet, little is known about how children develop an understanding of the financial world. While few researchers have interrogated this process, the knowledge individuals acquire about finances in their youth likely influences how they manage finances in adulthood and could have further implications for mobility. If children learn to manage money in the same way as their parents, this could, in a very tangible way, predispose them to occupy a similar economic position. Drawing on in-depth interviews with 40 parents and adolescents living outside Philadelphia, this project explicates the process through which children learn about finances. While the families interviewed were largely middle-income, many faced severe hardships during the Great Recession, ranging from job loss to bankruptcy. I find, however, that these families’ experiences with economic hardship did not prompt a greater discussion of financial matters with children, but rather led some parents to shelter their children from financial concerns. Although these parents recognized the importance of teaching their children about finances, few proactively discussed finances with their children. Instead, adolescents largely learned about both their family’s financial circumstances and how to manage their own money observationally – by watching their parents, overhearing conversations, noticing changes in spending, and even reading mail. Adolescents were therefore ultimately only exposed to the financial contexts and concerns of their parents and consequently developed specific ways of interacting with the financial world and orientations towards it that paralleled views of their parents.

Author

• Sigrid Willa Luhr, University of California-Berkeley