School Is In Session: Teaching Our Children About Personal Finance

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It’s August and we know what that means. Summer vacations are coming to an end if you are a parent you are in the middle of back to school shopping and preparing your children for the coming school year. If you simply happen to be an adult living in southern California, you’re preparing yourself for the bumper to bumper traffic that will commence in about a week. Yep, those 20-30 minute commutes to work are coming to an abrupt end (I think I just shed a tear). Classrooms will be decorated with welcome messages, creative boards and cutouts, and teachers ready to impart their knowledge and wisdom upon children eager to learn. Although things have changed within our educational system over the past few decades – from disciplinary abilities, to the “anti this” and “pro that” campaigns, to the way we do math (another tear just rolled down my other cheek), one thing remains a true necessity; the importance of the collaboration between home and school. Specifically regarding what our children are being taught, and especially what they are not being taught.

There are 10,473 schools in the state of California – elementary through high school – and unfortunately, a recent survey by The Council for Economic Education (CEE) presented the state of California with the letter grade of an “F” for the overall lack of financial literacy and education in our public school system. The main reason being that personal finance is not included in the state’s graduation requirements – either as a standalone course or embedded in any other course and schools are not required to offer financial literacy courses. Overall, our school system is taking last place when it comes to educating and preparing our children for their financial future. There are benefits that come with early financial literacy education; mainly an understanding of the basics of money management – savings, debt, giving, and investing. This type of education is proven to cultivate a population with a greater propensity to save, and a reduction of personal debt, not to mention vital to lifelong financial health.

So, here’s where we come in as a community. We have to begin to take responsibility for educating our children about personal finance. It doesn’t take a career in finance to teach the basics of how money works. Trust me, this can be done fairly easily and integrated into everyday life.

Elementary – Middle school: This is the most opportune time to teach the importance of how to earn and what they do with the money they earn. Allowing children to create opportunities to earn money, either through yard sales, lemonade stands, car washes, or maybe even an allowance for chores (not the kids in my house, but to each his own) is a great way to expose the value of earning what you work for. There are also plenty of games – board and electronic – that have been created to encourage the understanding of such concepts as earning, acquiring, and spending in a fun way. A practical way of teaching them to save, spend, and give is to label jars or envelopes and facilitate your children in filling each with their earnings. And your involvement doesn’t have to stop there. Some parents may give free range with how each category is disbursed, but there is a hidden gem of an opportunity here to drill down a little further and teach about budgeting by tracking what they have and what they need.

High school: Time is of the essence. Soon they will go off on their own and be confronted with financial decisions head-on. Whether it’s the long row of credit card companies that set up right in front of college campuses or just balancing the money that they have for an extended period of time, here is where we should emphasize the realities of risk, reward, and consequences of all financial decisions. And while the clock is ticking, it’s never too late to begin with the strategies mentioned above for our younger learners.

The following are everyday ways to have all children involved in learning about personal finance.

Use your daily or routine money transactions as an opportunity for teachable moments. This can be done at the ATM or inside the bank.

Allow your kids to participate in the management of the household finances. This is the perfect opportunity to let them help pay the bills (not literally – I know a few of you just got excited). They will also get a good dose of reality and get a glimpse of what it takes to run a household.

Emphasize important concepts. It is necessary for them to understand the opportunity costs of specific decisions. This will ultimately govern how they manage their resources and allow them to have a balanced viewpoint. Do they really want those specific type of shoes if it means not getting another outfit or going to the movies?

Make it fun. Include your children in the process of budgeting by setting a budget for shopping or traveling but allowing them to choose what to do with it. As a parent, I’ve seen my kids get really creative when they want something but have to work within specific confines of getting it.

It’s time we take control in moving their financial education forward.

No child left behind. Literally. (No pun intended)

-Drea

Photo Source: Pixabay

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