Research, regulation, industry reports

To raise savvy consumers, talk with your kids, set limits

Kelly Dilworth
Father-son discussion

If you want your kids to grow up to be savvy consumers, start talking with them now about how to make smarter decisions with their money.

According to a forthcoming study in the Journal of Consumer Psychology, parents who talk with their kids about their decision-making and take advantage of teachable moments – such as refusing to buy a new toy on impulse and then having a conversation about it – tend to produce more responsible and conscientious adults.

The study found that setting personal and financial limits is also important. Kids whose parents are relatively strict – but also warm and forthcoming with their kids – tend to be more self-disciplined and make healthier choices as adults.

“I think that our culture has changed over time to be more permissive with children, but we found a lot of evidence that demonstrated that it is OK to be restrictive with kids,” study co-author Les Carlson says. “It’s also important to explain to kids why the restrictions are important.”

The researchers analyzed dozens of studies on different parenting styles and how kids tended to react to them. They identified four common parenting styles that led to sharply different outcomes.

For example:

  • Authoritarian parents set strict rules and have high expectations for kids’ good behavior. However, they don’t explain the motives behind their rules and decision-making, and they often discourage kids from speaking up. According to the study, kids whose parents are authoritarian tend to make healthier or more responsible decisions when they’re younger; but as they grow into teenagers and young adults, they are less likely to be responsible consumers.
  • Authoritative parents also set strict rules for their kids’ behavior; but they tend to be more flexible with their rules and encourage kids to be relatively independent. In addition, authoritative parents talk to their children about their decisions and may even allow their kids to have some say in their family’s decisions and purchases. The study found that kids whose parents have an authoritative parenting style are more likely to thrive as adults and make smarter personal and financial decisions.
  • Indulgent parents are also very open and communicative with their children; however, they set fewer boundaries than authoritarian and authoritative parents. They are less likely to set strict rules or punish their children for bad behavior and are more likely to coddle them. According to the study, kids whose parents were indulgent tend to make worse decisions than their peers with stricter parents.
  • Neglectful parents take a laissez-faire approach to parenting and are less likely to enforce rules or monitor their kids closely. They’re also less likely to help guide their children’s development and communicate openly with their kids. Not surprisingly, kids whose parents were neglectful also tended to have a harder time making intelligent decisions when they were grown.

“One would be hard-pressed to name any agent that plays a more pivotal role in children’s development as consumers than that of parents,” wrote study authors Jessica Mikeska, Robert L. Harrison and Carlson in the report.

“Children develop into consumers via consumer socialization, i.e. ‘processes by which young people acquire skills, knowledge and attitudes relevant to their functioning as consumers in the marketplace.’”

Although there are often many people in children’s lives who play an important role in socializing them and influencing their choices, parents tend to be more pivotal, say researchers, particularly when kids are young.

Bottom line
To take advantage of your influence, talk with your kids often about your choices and explain the reasons behind your decisions. It’s also a good idea to engage your kids in conversations about your surroundings, advise researchers, and point out instances in which marketers are trying to influence their decisions.

“For example, parents can talk about why they are skeptical of advertising they may see in a store to teach children how to filter information,” notes Carlson in a news release.

“Watching television with children is another opportunity to engage with them in conversation about what they are seeing to teach them how to be fully informed consumers.”

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