Talk about being stuck between a rock and a hard place … In a recent survey from the Edelman Financial Engines’, 90% of parents with children ages 4 to 8 felt it is extremely important that their kids grow up with good financial habits. Further, 91% of these parents felt that they themselves are the ones who should teach their children about money. Here’s the funny part …. 49% of parents surveyed said they don’t know how to discuss money in ways they think their child would understand.
Currently, the United States ranks 15th globally in financial literacy. That’s right, 15th behind several smaller countries. These numbers are staggering considering the lack of financial education helped us get here … $21.8 trillion in total debt, $1.5 trillion in college loans and ($1.04 trillion) in credit card debt. This debt will haunt our children for decades, but let me ask you, if they don’t understand the ramifications of all the bad decision that got us here, should they really care that the problem exists? Well, an ostrich can stick its head in the sand but still get eaten by the lion.
So why can’t our kids just learn more about dealing with money in school? Seems like a simple solution to a growing problem, right?
Opponents of teaching personal finance in school argue that schools shouldn’t be the place to teach about money since there are personal (family) choices to consider. In other words, there is no “clear” formula to use. They would prefer parents to teach their own personal finance values in their children, but as we mentioned above, parents aren’t comfortable doing this since some parents likely have poor personal finance habits themselves.
This is what we call the “Circle of Dumbness”. Schools want parents to teach it, parents want schools to teach it and kids end up learning nothing most of the time. In order to break the cycle and raise a generation of fiscally savvy individuals, we need an organized approach that uses sound principles to prepare students for the real world.
As of now, just 17 states require a financial literacy test be passed in order to graduate high school. More states need to make this commitment to the kids who will be tasked with lowering all the debt. If students can receive some personal finance education at the home, that’s great, but this shouldn’t replace an organized financial literacy class that teaches the basics of money management — including budgeting, saving, investing, debt, taxes and being charitable.
No matter whether a student has in-class or at home education about money, reading can only do so much. The kids will need to also have hands-on experience and build a solid routine to take what they learn in class into the real world. Good drivers don’t just walk out of a driver’s education class, they must practice and take a test behind the wheel. Apps like BusyKid are now available to help give the necessary experience of earning, saving, sharing, spending and investing real money. Think of it the same as you would the student-driving sessions you bought.