Ok, I’ll admit it. I stole this headline from the National Association of State Boards of Education’s report on financial and investor literacy. The title says it all. If you decide not to teach your kids about money when they are young, you may be ceding their financial educational literacy to credit card companies or financial institutions who may not have your children’s best interests in mind. This is certainly not to say that credit card companies and financial institutions are bad, only that I don’t believe they should be the primary source of financial literacy education for our kids. Parents need to teach their kids about money. Why? Let me give you a few snippets from the report:
“In 2005, the average personal savings rate for the year dipped into negative territory (where it’s remained) […] in the United States for the first time since the Great Depression as consumers relied on credit and/or tapped into personal savings and other assets to allow them to spend more than they took in. As a comparison, savings rates for countries in Western Europe hover around 14 percent.” In short, we need a country-wide change in attitude towards saving money. We must teach kids the basics of financial literacy as early as possible, just as we do with teaching them their ABCs, personal hygiene and eating right (though I suppose we still need work on the latter of these). I believe that this may take a generation to do (though hopefully sooner) and that we need to start now.
“Changes in employment and public policy have only recently put substantial financial responsibility on the shoulders of individuals, a condition for which they have not been adequately prepared. Financial literacy is as much a societal concern as it is an issue for individuals.” The NASBE narturally argues that the state boards of education need to be involved directly in K-12 financial literacy. I do agree that classes in personal finance are arguably as important (if not more important) as those in the three R’s, and I’m glad financial literacy requirements are in place in some states. I believe, however, that it’s of paramount importance that parents take significant responsibility in the process, as they will set the stage with their own behaviors as to how children will view and use money. I created a DVD, The Money Mammals: Saving Money Is Fun, to help parents start this dialogue. If you are interested in finding out more, click on the link to the right.
Most importantly, youth financial literacy makes a difference. The NASBE report notes, “The evidence shows that youth financial education can make a difference. Individuals graduating from high schools in states the mandate personal finance education courses have higher savings rates and net worth as a percentage of earnings than those who graduate from schools in states without such a mandate.”
So before you decide to wait to talk to your kids about money, be sure to ask yourself, “Who will own YOUR children?”