Kids Need to Learn About Money
By Stefanie Monge, Omaha World-Herald, Neb.
May 22–World-Herald readers were invited last month to take the Jump$tart Coalition for Personal Financial Literacy 2008 survey that was given to high school seniors to compare their financial knowledge.
Nebraska high school seniors scored slightly better than the national average on the survey, but with an average of 50.8 percent correct answers, there was still plenty of room for improvement.
Readers who provided feedback with their test results on Omaha.com said they did much better than the high school students, with scores ranging from 78 percent to 100 percent. And while they also disagreed with some of the answers — and questions — they did agree that parents and schools need to do a better job of teaching financial literacy at a young age.
Karla Foit said her 4-year-old daughter has a piggy bank she uses to save coins earned by helping with chores around the house. When her daughter asks for something, like a piece of candy at the grocery store, she is required to buy it with her own money if she really wants it.
Foit, a senior business systems analyst at Mutual of Omaha, said she is trying to help her daughter understand that people have to work in order to buy things.
“It’s important for kids to realize early that they can’t always have things handed to them,” she said. Children see their parents use credit cards to pay for everything and they can get the impression that you “just magically get things” using a piece of plastic, Foit said.
Parents should be accountable for teaching their children to be responsible with money, Foit said.
A majority of Americans said they learned the most about personal finances from their parents, according to the 2008 Financial Literacy survey from the National Foundation for Credit Counseling and MSN Money. The survey also indicated that those who reported keeping close track of personal expenses were more likely to have learned about finances from their parents.
The importance of following a budget was also a recurring theme in readers’ responses. Budgeting should be the first thing children learn about financial literacy, said Jim Casey, a computer programmer at Vertrue.
Almost 20 percent of adults in the financial literacy survey said they keep little or no track of their monthly spending.
“There is no mention in any of these questions about setting up a monthly budget and sticking to it,” Casey said. “There are too many questions about the best way to use a credit card or the best way to borrow money and not any emphasis on how not to spend money when you don’t have it.”
Envelopes can be used as a tool to help budget by placing a predetermined amount of cash in different envelopes for monthly expenses, said Jamie Karl, a vice president at the Nebraska Chamber of Commerce.
“For too many people, there is more month than there is money at the end of 30 days,” he said. “You need a spending plan, or you are setting yourself up for failure.”
“And if you don’t have the money, don’t buy it,” Casey said. Young adults and college students are just getting their feet on the ground and should not be borrowing money, he said.
Casey said that although many rely on credit to pay for luxury items, he and his wife saved money to build a new deck instead of using a home equity loan.
Children should be taught to save money as soon as they begin to receive it as a gift or for doing chores, in order to form the habit early on, Foit said.
Foit said that her daughter would be able to spend the money she is saving on their next trip to Disney World. This will teach her the importance of saving and will give her some power over her spending decisions, Foit said. “If she spends it all on one thing, then it’s gone.”
“Give children the opportunity to make financial decisions with a little guidance at first,” said Kay Kruger, a teacher at Gordon-Rushville High School.
Kruger agreed that children should be taught about financial responsibility at a young age but said it should come from schools as well as parents. The children might not be learning the necessary information at home if their parents don’t know it, she said.
“Nebraska public schools are long overdue in adding financial literacy to the state’s high school curriculum,” Karl said. It needs to be as ingrained in the curriculum as math, science and English, Karl said.
Financial literacy classes, such as personal finance or economics, currently are not part of graduation requirements in Nebraska, but many schools do offer these types of classes.
Kruger teaches personal finance for one semester of her family life class, she said. She uses a financial education program from Arizona State University that teaches the teens to understand topics such as paychecks, credit, stocks, how to buy a car and insurance.
The students have responded well because the material covers information they will need to know once they are on their own, Kruger said.
The semester ends with the students participating in a simulation in which they have to design a budget for a family, making choices about housing, transportation, insurance and credit cards. “It helps to better prepare the teens to make financial decisions,” she said.
Bambi Bartek, an Omaha Public Schools board of education member, said the Jump$tart survey made her realize the importance of teaching financial responsibility while children are young.
“Most of these items I learned after I had graduated from high school,” Bartek said. “Many of the items, I learned through life experience.”
“I need to start sharing these lessons now, before my kids are forced to learn the hard way, when their credit history is in trouble or they are in debt.”
–Contact the writer: 444-1085, stefanie.monge@owh.com
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