Positive parental influence on money issues has a lasting effect
People aged 18 to 34 - dubbed the millennial generation - who enjoy a positive parental influence around money have twice the savings and half the debt as those who don't, according to Experian's Millennial Me & My Money survey.
In a survey of 4,075 adults (about half of whom were aged 18 to 34 and the other half were aged 35 to 55), 67 per cent say their parents or guardians have had a positive influence on their money management habits, while 17 per cent say their parents have had a negative influence.
The survey showed that the apple doesn't fall far from the tree: those respondents who were aged 18 to 34 (so-called millennials) who believe their parents had a positive influence on their money habits had almost double the amount of savings compared to those who say their parents had a negative influence - £9,842 and £5,282 respectively.
The importance of financial education
Those who have benefited from a positive parental influence also have less than half the outstanding debt (excluding mortgages and student loans), amounting to £2,322 versus £5,139 for those with a negative parental influence.
Commenting on the survey, Clive Lawson, managing director at Experian, says: "It's striking to see just how much of an impact parental influence can have on the financial wellbeing of millennials in adulthood.
What this research made clear to me was the opportunity that we as parents have to set foundations by helping our children learn from our experiences of managing money and enjoy the advantages that might bring them later in life."
In contrast to those who have been positively influenced by their parents, those who stated their parents had a negative influence are twice as likely (32 per cent versus 14 per cent) to save none of their disposable income each month.
They are also twice as likely to have run out of money before payday in the past (44 per cent versus 21 per cent) and more than twice as likely to have missed an agreed credit repayment (17 per cent versus 7 per cent).
Furthermore, they are more likely to have gone into an unplanned overdraft (33 per cent versus 19 per cent) and more than twice as likely to have defaulted on a credit account (10 per cent versus 4 per cent).
They are five times more likely to have a County Court Judgment against their name (5 per cent versus 1 per cent).
Robert Gardner, founder of financial services firm Redington, has also emphasised the importance of parental influence.
He says: "It has been suggested that our attitudes towards money are formed by age seven, so if your parents prefer to spend, spend, spend on credit cards rather than save, then it's likely you will have the same attitude. That's why financial education is so important and the earlier, the better."
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.