Kids and Money

One of the most important ideas a parent should convey to their children is how to handle money. I may disagree later with my generation coming of age and our inability to handle our finances, but I think that many of us were hurt by not being taught to be fiscally responsible. The average college student graduates with $2,500 in credit card debt, which may not seem like a lot but can pile up with other costs of starting out in life begin to pile up. The average household has piled up $9,000 in credit card debt and doesn’t seem to be stopping.

Credit card companies are working harder to extend credit to youngsters to try and get them hooked early on easy credit. An estimated 11% of teenagers have credit cards, some of them as young as 13 (minority laws apparently don’t stop credit card issuers). That is why we have to start educating children on money early, and that has to start at home.

It has to start at home because schools are falling down on this one. Only 12 states currently require any sort of personal finance course to graduate. The MSNBC story states 12 more are considering requirements, but with the pressures of state budgets and No Child Left Behind’s focus on only reading and math, there will not likely be a whole lot of push for these classes. The percentage of high school seniors that had taken a personal finance class dropped from 2004 to 2005.

There is also anectodal evidence that personal finance classes for teens don’t work. In a recent survey of financial literacy of high school students, students who had taken a class actually fared worse than those who did not.

Parents also need to know that learning doesn’t stop at the school doors. Your kids will watch what you do and pick up your habits (heck, my two year old already does things that amaze us just by watching my wife and I). If you’re poor with money, it’s likely your kids will be as well. To truly teach your kids, you need to clean up your own finances.

MSNBC has nine ways to help you teach your kids about personal finances. Some will work in the real word and some won't. You need to pick and choose what does work.

• Don’t teach, just talk
• Get them a piggybank – or a spending account
• Give them a goal
• Monitor their use of plastic
• Have a “Family Money” night
• Tone down the consumerism
• Use extracurricular activities
• Turn them into investors and donors
• Make them work for it