Parental Transfer of Financial Knowledge and Later Credit Outcomes Among Low- and Moderate-Income Homeowners

Publication Date

January 2011

Author(s)

Andrea Taylor, Elizabeth Books Freeze, Jonathan Spader, Michal Grinstein-Weiss, Yeong Hun Yeo

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Researchers find that low-income adults who receive high levels of money-management teaching in childhood from their parents have higher credit scores and lower credit card debt in adulthood.

It is well established that acquiring financial skills during childhood is linked with better savings in adulthood. Little is known, however, about the relationship between parental teaching of money management early in life and children’s financial outcomes in adulthood. This is particularly true for low- and moderate-income (LMI) households.

Using data from Community Advantage Program survey data for 2,389 LMI homeowners, center researchers find that adults who report receiving high levels of money-management teaching in childhood from their parents are associated with higher credit scores and lower credit card debt in adulthood.

Researchers also find that the level of parental financial teaching influences the relationship between children’s later educational attainment and credit scores.

These findings suggest implications for initiatives promoting financial capability for parents and children.