I was clopping down office stairs the other day with one of my producers and a new friend, Jackie, as she filled me in on how she became so money-savvy. When people tell me their money habits and situations, as she had earlier in the day, especially when they’re good ones, I always like to ask where they learned how to do what they do. Jackie, a late-20-something, learned a lot from her mom who raised a big family and managed the purse strings.
That’s what many money-savvy people have in common: Parents that involved them in money discussions early and often. I learned a tremendous amount from my dad who had me, at fifteen years old, go to the bank with him to sign up for my own checking account and savings passbook (remember those?). Money talk in my family wasn’t taboo. For example, we six kids were summoned for a family meeting the Sunday before my parents—quite upset—took out a second mortgage on the house, caused in part by the economy being in a recession.
Times like these tend to be when kids who are old enough to understand really feel the stress of stretched dollars. Maybe that means you tell them why they can’t have the new Wii, but why not make it a habit going forward to not only talk to your kids about money when times are tough? Start now to help them understand what that plastic in your wallet represents and whom that credit line really belongs to.
The Jump$tart Coalition, a non-profit financial literacy organization, released in April the results of their money-survey of high schoolers and college students. The results show that we have a long way to go in teaching kids the vital basics of money management. This is a pricey form of illiteracy not just for the more than 50% who failed that test, but for America as a whole.
How do you teach your kids about managing money, or how do you plan to raise them to learn? What kind of money lessons did you learn growing up that shape how you deal with money now? Maybe it’s time to revive Home Economics—of a different sort.
The fact that more than 50% of U.S. high school students failed a financial literacy test bolsters the idea that students should be taught financial skills in our schools as well as our homes. When these financially "illiterate" students graduate and have children in the next 5 or 10 years, why should we believe that they will be able to teach their children financial literacy? Competent teachers in school systems that respect the value of properly teaching financial basics will go a long way toward mitigating many of our nation's financial woes. When our young adults understand the responsibility involved in owning a credit card, the price of credit, the need to keep their credit in good standing, that someone should save for what they want rather than charge it if they don't have the money to pay the balance off in full, and that they don't "need" that $200 purse or $500 gaming system, we will all be better off.
Of course, there are a lot of influences out there today teaching our children to do the wrong thing (advertisers, popular culture outlets, other parents), but at some point it comes down to personal responsibility - kids need to know how and when to act responsibly and the consequences of not doing so. And having a strong understanding of how money works is critical. This is a trend that impacts all of us on both the local and national levels, and is a subject that has a rightful place in our schools. --Ned, VA
Posted on: 06 Jun 2008 10:29 A.M
My parents never taught me all that. I learned it by myself - reading books and experience. There were tough days when I didn't really have any money and my best friends paid for my food. It's painful but that experience help me to increase my financial literacy. I'm 22 but I have been "bankrupt" a few times. For me, it's better to be poor at a young age then when I've become an adult. Time is my advantage. --Sheikh, Malaysia
Posted on: 05 Jun 2008 10:03 P.M.
You're so right on the mark Carmen. My father opened me a share account at a local credit union here in Atlanta when I was 15 years old. I was writing checks before I was driving a car!!
In fact, I checked and he's still listed on the account 25 years later.
It totally starts at home. And when it doesn't...look out!!
I have the honor of speaking at a local high school once a year to the entire senior class and these kids, God love them, are like lambs headed to the slaughter. Only in this case the lambs are soon to be college freshmen and the slaughter (metaphor) is the guy standing behind the "Sign Up for Your Student Credit Card" table outside the student's center giving away $5 Starbucks gift cards in exchange for you filling out an application.
It's sad but this is the way a huge percentage of our teens/new adults will learn about credit and finances...from large credit card issuers. And, of course, they have their best interests at heart...NOT!! Keep up the good work!! --John, GA
Posted on: 05 Jun 2008 9:03 P.M.