I've had many people bemoan the fact that they weren't taught any money management principles either at home or in school while they were growing up -- they had to learn them on their own. I fall into this camp as well. My mom was a single parent for much of my childhood and she didn't really know much about handling money (other than how to stretch it like rubber). And school? My best money-related education was pitching quarters against the wall (which, BTW, would get you a trip to the Office if you were caught).
Someone needs to do something about this situation. If we can teach today's kids about money, hopefully they'll be much better off -- or at least better able to manage -- than many of us were. I'm excited that someone as influential as David Bach is taking on this project (see my interview with him where he mentions that this is next on his agenda). However, in my opinion, school money education is not the main avenue for teaching our kids. I'm in agreement with this piece from Market Watch that says financial literacy begins at home. Here are their thoughts:
The most critical lessons of financial literacy often are best taught at home, simply by allowing the kids to watch things that usually happen behind closed doors.
Let the children watch you pay the bills and balance the checkbook. Have them see you deposit money, and not just using your credit or debit cards, so that they understand that money has to go in before it can come out.
Have them involved in a family survey of just how much money is being spent each month, and for what. Then involve them in discussions of how you might cut spending and what you might do with increased savings.
Too many kids think money comes from a bank machine; they don't recognize all of the basic costs involved with running a household (or just the costs involved in having a first dorm room or apartment). Make sure they understand how to open and close accounts -- because they won't know much about security deposits -- and understand the value of paying bills on time.
I agree with this 100% -- in theory. The practicality, however, is a bit more complicated.
Why? Because by watching his/her parents and how they handle money, the average child will learn:
- How to spend more than they make
- How not to save
- How to rack up a bunch of debt
- How to get a bad loan
I could go on and on, but I think you get the picture. Today's parents must first educate themselves, then apply what they've learned and THEN they'll be able to teach their children the proper ways to handle money. I'm hopeful that Free Money Finance be one source that can help them do this.
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