SA Research: How Parents Impact a Child’s Financial Intelligence

In South Africa, financial resilience among young adults often begins at home. A recent study sheds light on how parental behaviours influence financial attitudes and knowledge - key elements of financial intelligence. Let’s delve into the findings and consider how this connects to supporting individual financial journeys, including tools like RCS personal loans.

The Study at a Glance

In 2023, researchers Adam Ndou and Sam Ngwenya investigated the impact of parental financial socialisation on financial attitude among young Black African adults in rural and low‑income areas (specifically Fetakgomo Tubatse and Intsika Yethu municipalities) in South Africa. Through a quantitative methodology using surveys and multiple regression analysis, they examined five dimensions:

• Parental financial behaviour (role‑modelling)

• Parental financial monitoring

• Parental financial discussion

• Parental financial communication

• Parental financial teaching

Their results were revealing: only parental financial communication and teaching had a significantly positive effect on young adults’ financial attitude—meaning their beliefs, outlook, and approach to money. In contrast, observed behaviour, monitoring, and mere discussion did not show a positive link.

In other words, actions like direct communication and deliberate financial instruction mattered more than simply parents acting as role models or keeping tabs on spending.

Another facet of Ndou’s research focused on parental financial socialisation as a whole in these communities. Here, the overall socialisation score came in at a moderate 53%, suggesting that, while parents are indeed imparting financial norms, the depth and quality of that socialisation may be limited - possibly due to cultural norms where money conversations are often considered taboo.

Further, related research by Ndou explored how parental socialisation influences financial knowledge. This study found that teaching, discussion, behaviour, and communication all positively impacted financial knowledge - especially communication, which had the strongest effect. Monitoring, however, had a significantly negative association in that case.

What does this mean for financial intelligence?

To summarise clearly:

• Communication is key. When parents openly talk about money, budgeting, saving, and consequences, it cultivates positive financial attitudes and deeper financial understanding in children.

• Teaching, such as demonstrating how to budget or save, also supports development of good financial habits and knowledge.

• Watching what parents do - their behaviour - without explaining the "why" may have limited effect. Similarly, simply monitoring a child’s spending might even be counterproductive if it feels restrictive without educational guidance.

• Many rural or low‑income households engage in financial socialisation - but often in implicit ways or via cultural norms, which may lack depth or clarity.

Taken together, the research underscores that intentional and clear financial communication and teaching by parents play a critical role in nurturing a child's financial IQ - particularly in contexts where formal financial education is scarce.

Real-world context in South Africa

In rural and low‑income areas, young adults often face financial challenges: limited access to formal financial services, lower financial literacy, and vulnerability to informal lenders. This makes the role of parental socialisation all the more vital. When parents actively teach budgeting, saving, and cautious borrowing, they become a first line of empowerment against financial instability.

Increasingly, financial well‑being is linked to better overall life outcomes - from improved mental health to life satisfaction. Cultivating strong financial attitudes and knowledge early can lay the foundation for long‑term stability.

Actionable tips for parents and caregivers

To build financial intelligence at home:

1. Start conversations early - share ideas about money, even simple concepts like saving up for items.

2. Teach by doing - let children help with budgeting, grocery planning, or tracking expenses.

3. Explain financial decisions - why you choose one lender over another, why you save, why you avoid unnecessary credit.

4. Avoid just monitoring or imposing rules - make it a learning experience, not control.

5. Use everyday moments - like shopping or paying bills - to reinforce sound financial thinking.

 

South African research clearly shows that the most lasting influence parents have on their children’s financial intelligence comes through intentional teaching and open communication - especially in underserved rural and low‑income areas.

As young adults build their financial lives, tools like RCS personal loans can offer responsible access to credit when needed - whether to cover emergency expenses, or support education. When combined with a foundation of strong financial attitude and knowledge, a loan can be a powerful tool for independence and stability.

By fostering financial literacy at home and leaning on trusted financial resources, we can equip the next generation to navigate money with confidence and resilience.

 

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