Parents have a long list of lessons to teach their children: from tying shoes to the purpose of a curfew. Perhaps money management didn't make the cut in your childhood curriculum. While almost three-quarters of parents feel that it is important to guide their children in such matters, about half aren't actively involved in helping their kids learn to manage their finances, including spending, saving and investing, according to a 2013 survey of more than 1,330 households from MassMutual Financial Group. But sometimes, learning comes from observing.
Learning the Basics
As for lessons lost, it often involves the very basics of how money works.
"My parents never taught me how banks make money," says Joshua Dziabiak, an entrepreneur in Austin, Texas. "I think this is a fundamental piece of understanding -- how and where to house your money, how interest works and how this can either work for or against you."
Nevertheless, Dziabiak had an excellent opportunity to learn the ins and outs of personal finance while very young. He started his first Web design business at age 15 and sold it for $1 million before he turned 18, putting him among the first teenage "dot-com" millionaires. He went on to co-found The Zebra, a venture-backed online car insurance agency.
"Banks compete just like every other business," Dziabiak says. "My parents, having inherited the same banking relationship that ran in our family for years, never explored other options and in doing so, probably cost themselves thousands of dollars. A good bank can empower you or your business with fair-lending practices, but it's important to shop and understand how they make their money so you can really understand what to pay attention to. I had to learn this lesson on my own."
Lessons on Real Estate
But parents can't teach what they don't know -- and forecasting a housing crash was clearly on no one's radar a decade ago.
"I think the biggest piece of financial wisdom that my parents didn't teach me that I had to learn for myself was that it's OK to rent and not own," says Iman Jalali, marketing director at Review Trackers, a Chicago-based company that helps businesses manage online reviews. "In their generation and state of the economy, it made sense to buy a house and watch your equity in it grow, but nowadays, it doesn't always make sense to buy. If I bought the house my parents wanted me to buy years ago, I would now be underwater in a mortgage."
Gabrielle Knowlton, a writer in Sarasota, Florida, also learned a lesson about real estate that her parents never taught her: the reality of property investments.
"My parents never told me -- because they probably never knew -- that you can't believe everything that wealth-building how-to books say," Knowlton says. "I did, unfortunately."
The bad advice: "`Buy investment property, [and] let the rents pay your mortgage while the property appreciates,'" she says. As a landlord, Knowlton has "real-life horror" stories, including unpaid rent, tenants trashing her property and many other scenes she claims are straight out of the movie "Pacific Heights."
"This mistake of owning houses I didn't live in cost me not only most of my life savings, it also cost me almost a decade of my life," Knowlton says.
Some Lessons Are Taught By Example
While parents may not dole out personal finance lessons at the kitchen table, their kids still learn a lot from them, often by example.
"My father died four months before I was born, and my mother never remarried," recalls Samuella Becker, a public relations consultant in New York City. "After my dad's death, my mom ended up working as a secretary in a tire factory in Akron, Ohio, by day and going to college at night to be a teacher. Bills were always paid in full by the end of the month as she didn't like debt. Like her dad, a Hungarian immigrant, she paid cash for her cars -- which she held onto for at least 10 years -- and our brick ranch home. But mutual funds, stocks and bonds and financial advisors were never part of her financial vocabulary."
While working for a Wall Street investment firm, Becker discovered there was more to personal finance planning "than a savings account at my local bank," she says. But the lesson she's learned since is perhaps the most important -- and poignant.
Her mother has Alzheimer's disease and has lived nearly the past four years in assisted living, which Becker says is an expensive cost. "What I have now learned about personal finance is that getting old is scary from both a health and financial perspective," she says. "Even when you think you've saved enough money and have tangible assets such as a home and car -- it may not be enough."
Becker says her mother's pension initially covered the cost of assisted living -- $3,200 a month. But as her mom became unable to self-medicate because of memory issues and needed help with showers, getting dressed and other essential activities, the charges rose. With annual increases for room and board, monthly costs soared to near $5,500. Becker estimates assisted-living expenses have surpassed $200,000.
"I've now put her house up for sale, just this week," she says. "So what I have learned firsthand as a guardian for my mom is that you can never have too much money saved for old age. I only pray that I can keep her in the same comfort [for] the rest of her life -- and earn enough money to contribute to her continued care."
Some untaught lessons can still be learned.
Hal M. Bundrick is a certified financial planner and former financial advisor and senior investment specialist for Wall Street firms. He writes about personal finance and investing for NerdWallet.