How Social Class Shapes Adolescent Financial Socialization: Understanding Differences in the Transition to Adulthood

Abstract

Gaining financial independence is considered a key component of the transition to adulthood. Yet we know little about how adolescents learn to navigate the financial world or how social class shapes this process. Drawing on interviews with 52 parents and adolescents in the United States, this study explored how children learn about finances from their parents. Middle-class parents in the sample were more proactive in teaching their children about finances. Working-class parents, however, often felt unequipped to teach financial skills and were more likely to shelter their children from financial matters. Ultimately, middle-class adolescents felt more at ease when navigating financial institutions, while working-class adolescents expressed greater uncertainty and were left to grapple with imperfect and sometimes contradictory information about finances.

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Notes

  1. 1.

    Income is reported in US currency.

  2. 2.

    In most cases, only one parent in each family was interviewed. However, partners John and Alex were interviewed jointly.

  3. 3.

    In cases where parents were married, information gathered about both parents was used to determine social class. In these cases, the parent with the highest occupation or education level was used to determine the social class category for the family. In cases where parents were separated or divorced, information gathered from the parent interviewed was used.

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Acknowledgements

I am wholly indebted to Frank Furstenberg, without whom this project would not exist. Laura Napolitano, Roberta R. Iversen, and Patricia Tevington were each essential to the data collection process and offered meaningful support along the way. I am grateful for the feedback provided by Sandra Smith, Irene Bloemraad, John Lie, Danny Schneider, Susan Holloway, Alex Brewer, the members of the UC Berkeley Gender and Sexuality Workshop, and the editor and two anonymous reviewers. Special thanks to the families interviewed for the project for inviting us into their homes and speaking so candidly. Any mistakes, of course, are my own.

Funding

This work was supported by the Russell Sage Foundation [Grant Number 83-09-01].

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Correspondence to Sigrid Luhr.

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Conflict of interest

Sigrid Luhr declares that she has no conflict of interest.

Ethical Approval

All procedures performed in studies involving human participants were in accordance with the ethical standards of the institutional and/or national research committee and with the 1964 Helsinki declaration and its later amendments or comparable ethical standards.

Informed Consent

Informed consent was obtained from all individual participants included in the study.

Appendix: Excerpts from Parent and Adolescent Interview Schedules

Appendix: Excerpts from Parent and Adolescent Interview Schedules

Parent Interview Schedule

Finances

  1. 1.

    At what age do you expect that (name of child) will be able to support him/herself on his own? Has this changed over the last several years? Have you talked with your children about these issues?

  2. 2.

    Generally, do you talk with your children about family finances? Why/why not?

    1. a.

      Do your children know about your financial situation? Do you think it’s important for them to know this?

    2. b.

      Do they know about your plans to pay for post-secondary education?

  3. 3.

    Do you ever talk to (name of child) about saving money?

    1. a.

      When do these conversations typically happen? Can you remember the last time you had a conversation like this?

  4. 4.

    Does (name of child) have a bank account in his/her name? How about debit cards or credit cards?

    1. a.

      When did they first get one? Why do you think this is important? Tell me about any ways you help them manage their money.

  5. 5.

    Do you give (name of child) an allowance? What about spending money? How do you negotiate this?

  6. 6.

    Do you talk to (name of child) about how to spend their money? Do you encourage them to spend it on particular things?

  7. 7.

    Do you and (name of child) ever fight about money? Tell me more about the last time that happened.

  8. 8.

    How do you teach your children about finances?

Adolescent Interview Schedule

Finances

  1. 1.

    Tell me about your responsibilities in the house.

    1. a.

      Do you contribute anything financially to the house? Tell me more about that. How did you and your parents decide this?

  2. 2.

    Have your parents ever given you an allowance?

    1. a.

      Do you remember what grade you were in when you first started getting one? Tell me the story about first getting your allowance.

    2. b.

      Is this tied into your household responsibilities?

    3. c.

      Do your parents ever give you spending money? Tell me how that works.

    4. d.

      (If no) have you ever talked with them about it? Tell me about those conversations.

  3. 3.

    Do you have any sense of your family’s financial situation? How does this compare to your peers’ families?

  4. 4.

    How often do you and your parents talk about money? Would you like the amount you talk about it to be more/less? Do they give you any particular financial strategies?

  5. 5.

    Do your parents seem to worry much about money?

    1. a.

      What signs do you see of this? Were there things you felt like you couldn’t afford while growing up? How did this make you feel?

  6. 6.

    Do you have a bank account?

    1. a.

      (If yes) Tell me the story of getting the account. Do you remember going into the bank? How did this come about?

    2. b.

      (If no) Have you thought about getting one? Tell me about why you have chosen not to.

  7. 7.

    Do you have a debit or credit card? When did you get one?

    1. a.

      Do you remember any details about this? Did someone talk to you about how to use it?

  8. 8.

    Do you use any apps or other things to help you with money? Have you ever taken any financial classes in school or elsewhere? Tell me more about that.

  9. 9.

    At what age do you expect that you will be able to support yourself without help from your parents?

    1. a.

      Have you and your parents talked about this?

    2. b.

      (If planning on attending college) Will you live at home while in school? Do you expect to live on your own after graduating?

  10. 10.

    How do you define financial independence? How do your parents? Tell me more about why you think these are similar/different?

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Luhr, S. How Social Class Shapes Adolescent Financial Socialization: Understanding Differences in the Transition to Adulthood. J Fam Econ Iss 39, 457–473 (2018). https://doi.org/10.1007/s10834-018-9573-8

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Keywords

  • Adolescents
  • Financial socialization
  • Inequality
  • Parenting
  • Social class