As millions of YouTube videos will verify, real-life can be very funny. However, it can also be very hard, especially if you aren’t prepared for it. Numerous studies support what plenty of many parents already see – kids not prepared to face the thousands of real-life financial decisions awaiting them. Add to this a growing generation with questionable work ethic and growing sense of entitlement, and it’s no wonder why so many young adults return to live with mom and dad. According to the U.S. Census Bureau, one-in-three U.S. adults ages 18 to 34 live in their parents’ home for one reason or another.
Part of the issue could be that right now in the U.S, kids aren’t learning enough (if anything at all) about basic finance. In fact, only 23% of high school students in the U.S. have access to guaranteed financial literacy education. Depending on where your high school kids go to school, they may be required to take a combination of foreign language, high-level math (algebra) and high-level science (anatomy) to graduate. Why not finance? Can you name any other subject they could take that would be used more after high school than finance? I can’t.
Learning how to speak a second language could come in handy but more so than learning about interest rates, taxes and credit cards? Is figuring out the value of X more important than knowing how to plan a monthly budget? Is dissecting a preserved animal as critical as understanding the differences between loans and how inflation drives prices?
It’s now time for all parents to evaluate if their children are learning the basic financial information that will help them save, share, budget and make smart money decisions as adults. Conversations take place in almost every state each year over whether a standalone finance course and a test should be required for high school graduation. In the end, it’s talked about and sadly some compromise is pushed through that doesn’t come close to meeting the need.
So, if you have a child between the ages of 5 and 17 and you are concerned with what they know about earning, saving, donatng, spending, and budgeting money, you need to take control of the situation. But wait, is there a way for a parent to tell if there is trouble ahead? Just watch out for these signs that your child could be heading toward financial failure and take corrective action at the first sign of trouble.
Your Children Could be Heading Toward Financial Troubles If They:
Say That Buying a Lottery Ticket is Their Retirement Plan.
While playing the lottery can be fun and helps many state run programs, it’s a bad retirement plan. Recently, the odds of winning the Mega Millions Powerball were somewhere around 1 in 302.6 million. You have a better chance of being struck by lightning (1 in 15,300).
Spend More Time Watching TV or Playing Video Games Than Helping Around the House.
Get your children off the couch or out of their room to do their share around the house. Besides building a daily routine, they will develop a good work ethic, demonstrate responsibility, get some exercise, and make your life easier.
Is Older Than 7 But Still Putting Money Into a Piggy Bank.
While piggy banks can be a cute way for a youngster to learn about saving money, what purpose do they serve after that? Almost none! Less than 10% of the money in the world is in the form of paper and coins so start teaching them about invisible money through online banking, rechargeable debit cards and apps for managing money.
Thinks Credit Cards are Free Money.
Some kids think that credit cards represent free money banks give away for people to buy things. There’s nothing free about credit cards once you have one.
They Think that Budget Refers to a Rental Car Company
According to a recent survey, 68% of U.S. households don’t have a monthly budget in place. Kids learn a great deal by watching what parents do and it’s important for you to set a good example for your children and budget.
Swears that the Term “Interest Rate” Means How Popular Something Is.
Definition Alert … An interest rate is the rate at which interest is paid by a borrower (debtor) for the use of money that they borrow from a lender (creditor). The best way to remember how interest rates work is the rate will most likely be high when you are paying back money and low if the bank is paying you money.
They Are Over 25 and Still Getting an Allowance From You.
If your child is around 25, living at home and still asking for money, something needs to change. Of course, there could always be a good reason why a grown child is at home without a job or income, but it better be a good one.
Many of these financial doom warning signs can be used to avoid a negative future if you start your children early on a routine of completing jobs around the house and rewarding them with an allowance. Starting around the age of 5, kids can learn work ethic, responsibility, accountability and how to manage money wisely. Using an educational tool like BusyKid will help parents assign tasks, motivate kids and reward kids when tasks are successfully completed. BusyKid uses the same technology (smartphone, tablet, or laptop) kids spend hours upon now, so it’s not a stretch for them.
So, as we roll through 2023, make it a priority to teach your kids about money. No matter how you decide to do it your children will benefit. Just remember that education, communication, and hard work must be part of your plan. Otherwise, we’ll end up with a generation that thinks 401K’s is the newest flatbed truck. By the way, it’s not.