Personal finance is not a mandatory subject in U.S. schools. We have to take gym, but not learn the basics of how to handle money. Why does PE trump PF?
Since graduating from high school I have never played crab-ball. But knowing about compound interest sure would have helped.
What kind of money behaviors have you talked about with your kids, and which strategies have you modeled? That’s the topic of “8 crucial money lessons for teens,” my current Living With Less column at MSN Money.
It’s scary out there: 74% of American teens don’t know how credit-card fees work, and 76% don’t know whether a check-cashing service is a good or bad idea.
We don’t know what we don’t know
The experts I interviewed had plenty of ideas about what kids should know, but varying ways of teaching them. For example, one suggested that you let your kids pay the bills each month: Show them what comes in and what goes out and let them see the account balance fall as they pay the mortgage/rent, the utilities and so on.
Jean Chatzky, who wrote the recently released “Not Your Parents’ Money Book: Making, Spending, and Saving Your Own Money,” has her teens’ allowances electronically transferred each week. It’s up to them to pay for the little extras in life, such as snacks with their friends or gasoline when they borrow the car. This helps them learn to prioritize: A movie and a burger with friends, or that really cute shirt that’s on sale?
(One of my upcoming Friday giveaways will be a copy of Chatzky’s book. Stay tuned.)
Laura Rowley of Yahoo! Finance was gung-ho on early savings. A person who invests $2,000 a year between the ages of 21 and 31 and then stops saving will still have a bigger nest egg upon retirement that someone who saves the same amount between the ages of 31 and 65. That’s our new best friend, compound interest, at work.
You don’t know what you don’t know. Those who are taught money management skills early in life have a distinct advantage over those who learn it the hard way — or not at all.
If you have kids, or are in a position to influence kids (grandparent, teacher, scout leader, auntie or uncle, mentor), I urge you to start talking money matters. Because money does matter.
What do you wish someone had taught you? How did you learn it? Do you still struggle with money management?
Those of you who were taught about personal finance: Can you share any techniques or resources with those who are bringing up kids right now?