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Teaching kids traditionally about money doesn't work: 5 things that will

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5 ways to teach kids about money that work

Parents are understandably freaked out by their kids' incompetence when it comes to all things financial. Surveys show that half of Americans age 18 to 34 couldn't come up with $2,000 for an emergency, and only 14.6 percent of college students with credit cards know their interest rate.

Few states have comprehensive personal finance as part of their public school curriculums—so there's no need to write a letter to your congressman. An October overview study that will be published in Management Science looked at 201 studies of financial literacy education programs and found that, in general, they're worthless. A student who takes a financial literacy course is not significantly more likely to make good financial decisions than a kid who skips class to watch "Family Guy."

When it comes to getting your kids to care about money, actions it seems can speak louder than words.

"It's taboo to say, but education alone is one of the least effective ways of changing behavior," said Ramit Sethi, author of "I Will Teach You to Be Rich." "When it comes to money for young people, focus on modeling behavior. For example, ask anyone what they learned from their personal finance teacher. They won't remember a thing! But if you ask what they learned from watching their parents deal with money, the connections are very real and emotional."

One of the most important things a parent can do is instill a vaguely paranoid, Marx-inspired distrust of the financial services industry in their children. That mindset can help them question and avoid unnecessary bank fees, credit card debt and private student loans.

For more concrete advice, top experts in behavioral finance offer advice on how parents can help their children to financial success.

—By Zac Bissonnette, Special to
Posted 15 Nov. 2013
Follow him on Twitter @ZacBissonnette

Rob Friedman | E+ | Getty Images