Did you learn about money in school? Likely not. How would your life have been different if you had learned the basics of personal finance before you were out on your own? Clearly today’s world is much different than it was when we were kids, or even five or ten years ago. People didn’t used to spend money they didn’t have.
Children need to learn financial life skills along with reading and writing. Why? Because they will make about six to ten financial decisions per day as young adults, and their future well being is based on those daily decisions. These skills, or the lack thereof, will literally shape that child’s future.
Every person, regardless of their background, will have to make important financial decisions. They deserve to have a foundation of unbiased knowledge on which to base those decisions. Money and how it’s managed, affects everything in a person’s life from health to relationships to career choices. Many young people choose jobs just to pay the monthly bills, rather than work towards something they are truly talented at and passionate about. Debt and lack of sufficient money is one of the main reasons young adults drop out of post-secondary education. The long-term impact of this loss of talent, inspiration and success throughout our society is tragic, not to mention the long-lasting effect on the individual.
How can teaching kids about money change that? First of all they would learn to speak the language so it’s not a taboo, uncomfortable topic anymore. Young people would be more comfortable asking questions and learning new lessons as their situations in life change. Whether it be a high school student working part-time and wondering about taxes or buying a car, to a first time home buyer getting informed about mortgages.
Although the earliest and deepest money lessons and beliefs come from parents, or whoever is raising the child during the formative years, it is critical parents aren’t left alone to shoulder this vital part of their child’s education. Many parents today aren’t confident in their own financial skills, and even if they are, they just don’t know where to start.
The Urgency for Schools to Teach Children Money Skills Now
Technology and the speed at which we are encouraged to lead our lives makes it easier and faster to spend, and thus much easier to go into debt and more debt. Less thought, emotion and awareness is involved in transactions in our modern world, and displays of “conspicuous consumption” are common and glorified in the media. Debt can cause unimaginable consequences in a young adults life when they don’t know what to do, and believe they have no good choices.
Our children require help in the form of education, so they can effectively determine the difference between needs and wants, and how to make decisions based on their own best interest. These decisions are highly emotional and difficult to make, especially when peer pressure is factored in. With awareness and understanding, our children can become competent at creating their own lives and direction based on their values, and not be constantly led by the high tech noise and powerful marketing of the day.
Why It’s Critical to Start the Learning Early
A person’s money “wiring” in their brain occurs in early childhood. So whether a parent realizes it or not, the way they talk about money, how they plan and budget (or don’t plan and budget), and the way they shop – everything is being taken in by their children subconsciously.
Learning financial information and skills is similar in many ways to learning a sport. A child needs to learn basic steps, practice them and progress to the next building block. As they build their knowledge and experiences, they acquire competence, perspective and confidence.
A great advantage teachers really have on their side when teaching young elementary school children these lessons is the fact that the students have no fear of the topic, and it’s easy to make the lessons fun. Whereas many adults and teens dread the thought of learning personal financial information, young children want to learn about money, and don’t have the “I’m not smart enough to be good at this” feeling that many older students carry with them.
The earlier financial education starts, the easier it will be for the students to learn, practice and develop good habits before the risks get high.
Small lessons during everyday life can have a significant long-term impact.
Financial success is based on all the thousands of decisions made on a daily basis over time. Since this is something each of us must be involved in during daily life as we grow into adulthood, doesn’t it make sense to teach all children the basics? I believe it’s our obligation. Why would we let another generation grow up without these essential life skills?
About the Author: Nancy Phillips, BS, EMBA, Author and Speaker; is the Founder & President, DollarSmartKids Enterprises, Inc.; Creator of the Zela Wela Kids. Nancy is the mother of two elementary school-aged children.
Photo: Willowstone Academy students hold the GISS Banks they made in class to learn that money can be used for different purposes: giving, investing, saving and spending.