Great Summary of Issues in Financial Literacy Education

One of the best articles written about the challenges we face in training people to be competent in money matters.

I have believed for a long time that financial literacy education's failure to date is not about the content, as there has been enough written, produced and printed about the in's and out's of the world of money. But instead, it is an issue of delivering the training information to the right person at the right time in a form that will be most effective for them. Not such an easy task.

The article, by Tom Hanza, the President of the Investor Education Fund, needs to be read by all people interested in and working on the education of kids, young adults and seniors in money matters.

Why Teach Kids About Money?

We teach young kids about money to ensure they build the skills necessary to make informed financial decisions throughout their lives. The life-long benefits of teaching kids good money habits and skills will make it well worth the effort.

Where do young kids learn about money anyway?

Pretty much everywhere — and especially at home! Young children learn about money by what they see, hear and experience in the world around them. They primarily learn about money by watching their parents use and talk about it. They are also keenly aware of how their parents feel about money by watching facial expressions, listening to word choices and tone of voice.

If you think about it, money is part of most of our daily conversations. We consider what we need (or want), if we need (or want) it now, go through the process of buying it or deciding to do it another day, embrace or bemoan a prior choice, plan for tomorrow, etc. As a consequence of the ever-present money conversations happening at home, kids are exposed to the ongoing successes, struggles and the unending money decisions of every day life.

Why do parents hesitate to teach the skills?

Parents tell us they want their children to grow up with the skills to handle money wisely — yet they often do not feel comfortable teaching children to manage money. Some parents feel they are not qualified, or that money is just not supposed to be discussed with kids. Other parents believe schools should be responsible for teaching kids about money. Others still tell us since they never had training and seem to be doing ok, so there is no need to teach their kids. We recommend parents take the time to teach children about money regardless of their income, their current knowledge level or how they were raised in order to fulfill on their wishes to see their children build money skills that can serve them throughout life.

When should the training begin?

Training, in our view, should start when kids are young — by early elementary school age when money habits are already being formed. We encourage parents to think of their kids childhood years as a money apprenticeship. From pre-school until high school graduation, with parental guidance, children have a chance to practice using money with little risk. And with responsibility for making independent money decisions (with plenty of room for making mistakes), children can learn that money is just a tool — something to be understood, continually learned about and used wisely.

What is the bottom line?

You do not have to be an expert to teach kids money skills and habits. We would like to show parents and other money mentors that it is easy to provide suitable learning opportunities and experiences for children to build good money skills and habits. Please check out our resources for working with your young kids (more resources coming soon for older kids) and let us know if you have any questions. We are here to help, so do not hesitate to ask.

What is Enough?

I hear in so many conversations that their is not enough. Not enough jobs, enough money, enough resources, enough blue jeans, enough fun, enough opportunity, enough time, enough personal responsibility, enough love, enough freedom and the list goes on and on and on.

In other conversations I hear that "we" are not enough. How many of you have said at least one of the following about yourself at some point?

I am not:

• good enough
• smart enough
• compassionate enough
• skinny enough
• happy enough

So if this language is in our day to day conversations, what are our kids thinking and taking in about the enough question? And better yet, how to we teach them the answer to the question - especially as it relates to money?

Seems to me that if anyone is to be good at making money decisions, they need to know what is enough for each purchase or giving or saving decision we face.

For myself, I start with these questions and try to figure out in the moment if I have enough:

Do I have enough right now?
Do I have too much right now?
Do I need more right now?
Do I just want more right now?
Do I have enough to give away to others right now?

What do you do to evaluate if you have enough?

How do you share this decision making with your kids?

Great Summary of Issues in Financial Literacy Education

One of the best articles written about the challenges we face in training people to be competent in money matters.

I have believed for a long time that financial literacy education's failure to date is not about the content, as there has been enough written, produced and printed about the in's and out's of the world of money. But instead, it is an issue of delivering the training information to the right person at the right time in a form that will be most effective for them. Not such an easy task.

The article, by Tom Hanza, the President of the Investor Fund, needs to be read by all people interested in and working on the education of kids, young adults and seniors in money matters.

Need for financial literacy rising in importance

Well after a few weeks away, I am happy to see the news out of Schwab today http://tinyurl.com/cossw2 that a recent survey of 22-28 yr old's indicates they now place being personally responsible for understanding how to handle money above all else!

Yahoo!

In search of a NEW Financial Literacy Advocacy Pulpit

The time is now to bring financial literacy to the national stage, but IN A NEW WAY. I believe it will only be solved if we tackle it in BOTH at school and at home.

So far, most public, high profile organizations have been focusing on getting national financial literacy curriculum standards into our public k-12 system or giving tools to after school programs. These have been met with limited success- not enough funding, no one agrees on what should be taught, AND there is no carry over to the home environment.

There is no one advocating at the national level, to ALSO build and supply families with tools.

Why do we need to support parents in this task?

First: Kids are learning about money at home, all the time. They watch and model what their parents do because this is where money is used and discussed on a daily basis.

Second: Real life decisions about how to save, earn, invest, borrow, spend or share money happen at home- not in school. Schools can teach how to add, subtract, calculate returns, etc-- but when it comes to making real decisions with money, it happens at home. " I have 15$, should I buy the new CD now or should I wait and save it so I can buy a new IPOD?" No school can replace this type of experiential learning.

Third: Parents want their kids to learn their money values (like we give 10% to charity each pay period). Schools are designed to teach in a values neutral way.

Fourth: Habits are set early in life and are very difficult to change. Setting good money habits in place early is key. It is much easier to teach a 5 yr old that each time they get money, some must be saved, some given away and some can be spent---setting up the habit of a balanced approach to cash management.

I seek a new advocate at the national level, to build a partnership of companies, government and experts to create an integrated set of products, tools and support for BOTH parents and schools to teach financial skills to our youth. The time is NOW!

Who is ready to lead? Who will support this effort with real MONEY?

Teens Clueless but Confident!

According to a study by Schwab and written up on Yahoo! by Carrie Schwab Pomerantz, 73% of teens think they will earn lots of money when they're out on their own---maybe as much as $145,500. And 63% say they are knowledgeable about money management-- they know how to budget, save and invest.

But then the numbers start to look a bit more murky----13% say they know what a 401(k) is, 14% say they know how income taxes work, and 23% say they know what a credit score is. But when Jump$tart gave students a basic financial literacy test the average high school senior got a test score of 52.4%-- an F!

As we all know teens are often both a bit clueless and way over confident in their abilities and if you consider that less than 20% of teens have taken a course on personal finance and, in this era of predatory lending and self funded retirement plans (401(k)s, IRA, etc.) teaching kids solid money skill before they leave home is far more important than it's ever been before.

The Numbers Tell a Chilling Story

More than 50% of US HH could live no more than 4 months with existing savings at the poverty level, not even their current standard of living! This is sooo scary.

Check out this podcast! http://hbswk.hbs.edu/item/5598.html

Worth listening to all of it.

The State of Financial Literacy in America

I am deeply passionate about finding solutions to teaching our children important money skills and habits before they leave home to go off to discover their role in the world. How wonderful it would be if all kids could grow up to be money savvy adults!

We live in a world today in which each of us has the responsibility to learn about and actively manage our financial lives. While the importance of financial literacy as a basic life skill is obvious to many parents, educators and policymakers, how to develop the skills in our children remains a challenge.

In a nation where nearly a third of high school seniors already use a credit card, a higher proportion have an ATM card, and over a million families filed for personal bankruptcy last year, the need for personal financial literacy is apparent. Yet fewer than 30 percent of young Americans are given the opportunity to take as much as one week’s worth of coursework in money management or personal finance in high school--from the Jump$tart Coalition for Personal Financial Literacy 2002 Survey of High School Seniors.

Schools, who struggle with insufficient resources to deal with the large set of societal requirements--like No Child Left Behind, aren’t able to add money skills development to their curriculum.

Parents, who struggle with managing their own debt and planning for their retirement just want their kids to be armed with a level of financial literacy they did/do not have themselves.

And to make matters more complicated (as if they weren't already) parents also have a hard job in walking a fine line in teaching kids about money between overprotecting them from the realities of money and setting their kids up for a life long preoccupation with money as a source of power and well being.

So what can we do about it??