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Don’t Let Your Kids Hit a Dead End Due to Lack of Financial Education

Posted Jun 09 2009 12:07pm


Money management, information and financial education is one of the best gifts you can give your children. Yet,  among our young people it is sadly lacking. However, this is not new.

How much preparation for the real world of “how money, credit, investing, debt management and how to distinguish a “need” from a “want”" did you get as a kid? If you’re like me, I’m guessing, not much. It’s a rare household that really teaches the world of finances (we can only give what we have or know!), even MONEY 101 to their kids. And, where then will they learn? In school? Nope.

Only seven states require high school students to take a personal finance course to graduate, according to the Council for Economic Education.

Discipline through planning, saving and knowing what is important to purchase is important all our lives. It’s important for kids to understand “the math” of a dollar and that there are some things they/you can and can’t afford “right now” or ever. Learning patience and to wait while planning, saving and getting the “gut” emotional hang of “Oh, I really don’t need it anyway now that I’ve had time to think about it,” is a important life-skill - vs - the throw-away, consumer based society we’re in. 

Some basic things you as a parent can do for your kids - before they go off clueless into the world armed with some cash, debit and credit cards waiting for misuse and disaster:

  1. Pay with cash. Give your kids real money/cash to pay for items with so that they get that when it’s gone, it’s gone, as opposed to a plastic card that means nothing to them except, MORE, MORE, INFINITY, MORE!
  2. Teach the Understanding of a Dollar. Do the math with them at home with items that have price tags to help them understand how much things cost, as well as in the store. If you give them a $5 bill and limit them to $4.50 plus tax (they have to learn about tax!) they will learn the basics of how it works, e.i., there is no more money over the $5 bill, so plan accordingly. Or, save it and spend later on something you want that costs more. It’s a choice, which is important to learn, that we always have choices.
  3. Learn to Earn. Give an allowance to make kids learn about “earning” the “money” that is the method to “buy” and “trade” for what they want. Be consistent with what is required to receive a specified amount of money.
  4. Teach Saving. Whether you use a good old pink piggy bank, envelopes or a new digital counter bank for coins that count up, saving is a life-skill to learn early; not so as to hoard and fear spending, but used to pre-plan purchases with forethought and enjoyment. Help them think through what they want - the cost and the math- so that success if learned, and not failure and disappointment.
  5. Teach the Value of Investing.   Give them examples of how you invest and how interest works and why.
  6. Teach them to Learn the Difference Between “Need” and “Want.” Have them spend money on clothing and school lunches (necessities) vs. fun food, toys, music or games (non-essentials).
  7. Be Honest About Your Financial Situation. Don’t say everything’s okay and keep spending if you’re having a hard time paying the bills. Kids need to know the reality without overdue burden on them. If you’ve lost your job, tell them the truth and how that translates into money-matters until you get a new one. If you make a financial mistake - it happens - explain it to them as appropriate and how it affects the bigger picture for your family.  Why? They most likely know something’s wrong anyway, or hear your thinking outloud or to others about it.  Your anger, fear and guilt are teaching them life-patterns, but not life-skills! So, just give them the basics and what they need to know if there are changes they need to know about.
  8. Have Fun with Finances!  When money if flowing in and when money is tight, let your kids see how you can enjoy it and take good care of it all at the same time.


See JumpStart Coalition for Personal Financial Literacy, a Washington, D.C. based non-profit that work with students.

Get free teaching materials from the JumpStart Coalition Clearinghouse too. For all ages and several languages.

Money Savvy Generation has great banks for kids to separate and save wisely.

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