When should children learn about personal finance…you know, how to work with money? The vast majority of Americans believe personal finance needs to be taught at least as early as high school from a paper produced by the Whitehouse in 2010. But is that early enough for all our children need to learn about money?
Americans ARE exhibiting low levels of financial capability. About half of Americans have trouble keeping up with monthly expenses, have no money saved for emergencies and do not save for retirement from a 2009 Financial Industry Regulatory Authority (FINRA) survey.
So how can we improve financial literacy for our youngest Americans? We need to consider what can be taught at what age. Financial education is a long term investment and financial capability is not something that can be shared across a simple three week class in high school. This push toward helping young children understand finances needs to be undertaken by parents as well as by the school.
So what can we help children understand and at what age? Check out a website called “Money as You Grow” found at http://moneyasyougrow.org. This website provides 20 considerations for what children need to know to live ‘financially smart lives’.
For 3- 5 year olds, things to learn include ‘you earn money by working’ and you ‘may have to wait to buy something you want’. For 11-13 year olds, more advanced thoughts come into play like ‘entering personal information, like a bank or credit card number online is risky because someone could steal it’ and for the 18 year olds, ‘when investing, consider the risks and expenses to the investment, like mutual funds, a college investment or a car.’
You may be reading this and thinking that people can be led to water, and still refuse to drink. But consider this statistic, “compared with Americans across age groups, young adults aged 18-29 are more frequent users of non-bank borrowing including payday loans and pawn shops, they are more likely to pay the minimum payment only on their credit cards and are more likely to elect not to use a bank.”
As the adults in the room, we need to make greater strides in helping our children to financial literacy. It is the only way to lead them to financial independence.
