I spent much of my career in Financial education and literacy. It’s not only a profession, but a passion. One of the things that has frustrated me for years, though, is how little is done in the US to educate kids about financial health and wealth before we cut them loose and send them to the wolves (or rather the student center on the first day of college where they are inundated with messages of consumerism and credit and, in turn, might as well be handed the keys to YEARS of debt, but I digress…)
Even parents with the best of intentions, rarely teach their children more than how to balance a checkbook (if that) and lecture them about the dangers of “credit cards.” I recently encountered a couple who had been educating their teen-aged daughter about financial responsibility since the time she was old enough to count – by *showing* her how to do and letting her learn it by actually doing it – with their oversight of course. I applaud them! More parents should do this – but it takes time, their own financial literacy, patience and most importantly – willingness. (I am still surprised that the US educational system hasn’t yet incorporated this into their every day/every student curriculum – but, again I digress.)
The point of all this is that I saw an article today that I am sharing here – and I ask that you share with all parents you know – that really cut to the heart of an issue about which I personally have a lot of emotion. As a society, we need to better educate our children how to live financially sound, but it starts with *teaching* parents how to raise financially literate kids. Therein lies the problem: Many parents don’t know how to teach their kids to be smart financially. So they don’t teach them at all. It’s a vicious cycle.
I am offering a few quick summary points from the article – 17 Ways To Teach Your Kids To Be Financially Independent – that I think are most relevant, but read the whole article. It is well worth it! And, as the author, Jesicka Labud, says, “you might learn a thing or two yourself!”
- Be creative with the allowance system. Don’t shield them from the process of earning and losing money.
- Help them set up high yield savings accounts, and a no-fee checking account.
- Teach them how to save money and pay bills on time by automating their finances.
- Stop teaching your kid how to survive – teach them how to accumulate wealth.
- Remind them of the importance and perks of having good credit, and show them how to do this–the right way.
- Show them how to invest in the stock market with diversified life-cycle and index funds, and help them set up a Roth IRA as soon as they’re able to.
- Stop telling them that buying a house is the safest form of investing.
What are some of the messages – good or bad – about financial responsibility did you hear from your parents? What do you wish you had heard?