Monday, October 01, 2007

Who Will Own Our Children?

Ok, I'll admit it. I stole this headline for 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 child'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] 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 not more important - than 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 that "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?"



Nivek said...

It's going to be hard to get parents to teach their kids about money when so many adults are lacking in financial education. I wish there was a big non-profit organization dedicated to advancing personal finance education for all ages. Someone to lead a national movement and get the message out to the public and to the politicians.

John said...

I agree that we're on a long road to 10% (what our savings rate should be) and that it's imperative that parents are educated as part of the process. Interestingly, when I host live Money Mammals events for kids, parents seem to get a lot out of the simplification of our approach - focusing on needs vs. wants and on sharing, saving and spending smart. You might want to google the FDIC Money Smart Program - The Federal Deposit Insurance Corporation has a wide reaching Money Smart Program to help teach financial literacy. Also, we are part of the National Jump$tart Coalition to teach kids K-12 about personal finance.