Parental Reality - It's Up To Us

Parents,

To put it simply, financial literacy is up to us.  Don't believe me?  Take a look:

-80% of us think that schools provide classes on money management and budgeting to 

students.

-In reality, only 12% of Americans graduate from high school having learned anything about money at all.

And consider...

-71% of teens say they learn money management from us.

-And only 26% of us with children 5 or under feel prepared to teach their kid about basic personal finance.

Award-winning college professor and Jump$tart Coalition Board of Directors member, John Clow, says it best, "A financial literacy 'buck' is being passed from parents to teachers and back to parents again.  Parents assume that schools are teaching financial literacy, but schools, by and large, are not teaching it.  Teachers, like parents, don't feel comfortable." (The last point was a fact confirmed by Suze Orman on a recent Oprah episode.)

It's numbers like these that led us to create "The Money Mammals" to help not only engage, entertain and enrich kids' lives.  We've discovered, though, that by distilling the message down to its roots (needs vs. wants, making choices, spending smart and other basics) it really helps parents increase their own comfort level and carry forward the lessons from the show into their kids' lives.

We have a duty to teach our kids about the value of money.  Start today.  There really has never been a better time.

-John

Sources:  McCormick and Godstead, Learning Your Monetary ABC's (2006); FoxNews.com (2006); Fleet Boston Survey (2003)

Stop Reading to Your Kids!

I kid!  I kid!  You certainly wouldn't stop reading to your 2-, 3- or 4-year-olds because you know they can't read themselves.  Exposure to reading is a very important part of emergent literacy and will help them learn to read.  So why don't parents introduce simple money concepts like saving money to their kids at this age?  Ok, some do.  But most don't.  Why isn't "emergent financial literacy" considered just as important?  Just because your little one won't be able to tell you what a credit default swap is (if they can, please tell me) doesn't mean that they should be deprived of the essential building blocks to building good financial literacy habits down the road.  

Don't believe me?  Read the study, "Learning Your ABCs:  The Link Between Emergent Literacy and Early Childhood Financial Literacy" by Martha H. McCormick and David Godstead.

Please pass this message on to at least one person today.  You wouldn't dream of not exposing your kids to reading simply because they can't read.  Exposing them to "value of money" concepts (sharing, saving, spending smart) early is just as important because financial literacy is essential their future well-being.  Give preschoolers the tools to start building good financial habits.  Keep the message simple.  Start with saving.  Continue with sharing and then spending smart.  Want some help?  Try the "Thrive By Five" resource to the right.  Want to make it fun for kids?  Take a look at our Money Mammals program at www.themoneymammals.com.  

Oh...and don't stop reading to your kids.

-John

Turning the Corner

I see one huge silver lining in the current economic crisis our world is facing - financial literacy is already becoming a huge, hot topic.  I've seen a marked increase in articles promoting frugality and even teaching kids about money.  Not surprisingly, it takes a massive calamity to open people's eyes up to the importance of something.  Let's hope that the sudden new emphasis on frugality can lead us to the promised land - a nation of people who save at least 10% of our disposable income.  There's never been a better time for all of us to become money mammals.

-John

Needs and Wants Redux

Needs and wants. It's incredibly important to distinguish between the two. I've talked about this before, but it bears repeating. Why? I heard a report on NPR this week about an Audi dealership owner saying that the current economic crisis was keeping people from their transportation "needs." Hmmm. An Audi is a beautiful car, but it could hardly be considered a need. Even in car-centric Los Angeles, there are a number of options that would fulfill a car need at a much lower price. All of us with kids should think about this lesson - pay particular attention to your use of the words "wants" and "needs," especially when they are within earshot. We all know that kids ape our behaviors, and using the words needs and wants appropriately might help them better understand the difference.

-John

When Tough Times Affect the Kids

Read Sue Schellenbarger's article in the Wall Street Journal today. She has some terrific points about how we can talk to our kids about how the current financial crisis is affecting our families.

Here's a snippet:

"A 20-year study of 450 families with school-age children who were hit by a deep Farm Belt recession in the 1980s shows the psychological impact on kids can be signifcant and enduring. Rand Conger...at the University of California, Davis, and others, found financial woes often fueled anxiety, depression, behavior problems and poorer peer relationships in kids...The most successful families in Dr. Conger's study were those who 'managed to keep their priorities on the family itself,' remaining close and working together to solve problems, he says. To his surprise, kids didn't seem to mind that they lacked spending money."

-John

Rethink It

Do you and your family feel pressured to get gifts for relatives or friends? A sagging economy gives you an opportunity to address this pressure head on - people are more likely to be foregiving when you replace your $50 gift card presents with a $20 donation in their name to charity. It seems that many of us spend a lot of time and stress trying to figure out what presents to get for our adult friends. This is fine if you truly want to get presents for particular friends and relatives, but what if you're only buying presents because you feel like it's the socially acceptable thing to do? And what if you're buying long distance presents based on a list that's been delivered to you?

Rehink it. For your close friends, shouldn't just grabbing a drink or dinner together (and it can be cheap!) suffice? For long distance friends and relatives, what's the point of buying something for them, particularly if you've asked the person what he/she wants. And a long-distance gift card? I used to think this was a good idea (I love gift cards as much as the next guy), but, seriously, what's the point. Birthday recognition, right? Why does spending money have to go hand-in-hand with this? Why do you think? Because we've been conditioned to do so. I think big advertising might have a little to do with this.

Rethink it. If you happen to run across something perfect for a friend and it fits in your budget, by all means get it. But what's the point of sending your dad a $20 Amazon gift certificate when can't necessarily figure out how to use it. Rethink it. If it's about birthday recognition, block out more time to talk than you normally do. Make a small donation in someone's name to a charity that is meaningful to them (perhaps in search of a cure for a disease that affected their parents). Write a long email. Sing them a song. Just don't buy something if YOU think there's a better way. Rethink it.

-John

Stand Strong

On the path we are traveling to teach our children (this generation) to be smart with money, we must be relentless. When your friend tells you to "lighten up" and "just let them be kids," stand strong and tell them that amassing an army of toys is not being a kid. Turning a discarded box into a home for your dolls - that's being a kid.

When you feel guilty that you gauged the success of your birthday or the holidays by the volume of the haul (yep, that would be me too), stand stand strong and realize that you were enlightened by going down that path. You know that going down that road is like playing an unwinnable game. If you don't want to shower your child with gifts (from you or anyone else), don't let it happen. I know it's not easy, but it's your choice. Stand strong.

And when you see a behavior that you don't like, help them to change it. If you think YOU might be the cause of the behavior, stand strong and work it out together. I remember when my daughter first used an unacceptable word (I'll admit that I felt a pang of pride that she used it in context...but that's not the point). It was obvious to my wife and I that she had learned it, surprise, from us. So, in order to avoid looking like hypocrites, we decided that anyone (mom, dad, her) who used that word would be sent to time out. Our method worked (it's nice when ONE of your method's works). If you think your behaviors might be negatively influencing your kids, change them.

A root cause of this country's current financial crisis is lack of education. It's time to teach our kids to be money smart. The premise is simple - save, share and spend SMART. Because the pressure to simply spend is so great, though, the execution is difficult. We're in this together. Stand strong and believe that we can help our kids.