As more schools require a financial literacy course to graduate, adults continue to believe money education is best learned at home. In a recent survey some 83% of U.S. adults said parents are the most responsible for educating their children on the topic.
Here’s the link to the complete survey conducted by Momentive.
One concerning results of the survey is that most parents don’t even talk to their kids about money. Thinking that a financial literacy course in school is going to prepare kids to be money responsible adults just not enough. Why is this?
A financial literacy course provides financial knowledge. But knowledge does not teach kids how to manage their money. For that kids need hands-on practice.
In Florida, the largest state to mandate a financial course for graduation, the curriculum includes:
- • balancing a checkbook
- • managing bank accounts
- • applying for loans
- • filing federal and local taxes
- • disputing a billing error
In my state of Wisconsin topics include:
- • verbal vs. written contracts
- • the true cost of interest
- • protection from loss• sources of credit
- • investment options
Money education starts before kids go to school
All of the above is good to know, but financial knowledge is not enough. What kids really need is an essential life skill that I call financial competency. My strategy prepares kids for adult life. Kids are completely in control of their funds. Parents become facilitators not micro-managers. The book explains how kids:
- • track their money as a number in a written account initially kept at home, later transitioning to financial institutions
- • manage funds for age-appropriate expenses, e.g. school supplies
- • allocate funds for different purposes, e.g. person spending, entertainment
- • plan for future, e.g. not spending today (saving) provides more money later
- • accept responsibility for money decisions
We know that practice is necessary to develop any skill. In school driver’s education provides knowledge, yet kids can’t drive a car in a classroom. They need hands-on time on the road.
Outside of school, parents encourage kids in other fields such as sport or music. However, knowing football strategy does not make one a skilled football player, while reading music does not make a skilled pianist.
Likewise, financial literacy is knowledge, not skill. Money education builds on decision-making in addition to knowledge. Kids need hands-on practice making decisions with their own real money, something that cannot happen in a classroom.
For the first time, we have seven living generations on our planet. The oldest was born a century ago. For them, writing a check was high-tech. Today’s youngest generation may never write (or even hold) a paper check as adults. Consequently, generational attitudes about money and finances are different.
Money education carries over generations
In my research about generations I discovered one commonality. Money can always be managed as a number. That number may be in a checkbook, bank account, or other online balance. In many transactions today money never exists as cash. Regardless of how we spend money, money can always be tracked as a number.
Today it is more important than ever that our youngest generations learn to manage money as a number. Learn more about my book for teaching kids this essential life skill.
Money and Responsibility Define This Allowance System for Kids
The No-Cash Allowance is a guide for parents to create a money education in their home that starts as early as age three and continues through high school. The No-Cash Allowance is adaptable for any family because gives kids what they want: money, control of their own money, and the responsibility that goes with having money. Just like an adult.