What do we need to teach our kids about personal finance NOW when they are still too little to credit card or handle a checking account? And what about do as I say, not as I do? What if WE don’t have great personal finance skills ourselves? Does this mean our kids are doomed to a life of poor financial management?
I remember when I graduated from college and was trying to be responsible. I paid my credit card bill monthly — I didn’t pay it off but I made a payment. But once I stupidly paid my bill a few days late but with a higher amount that normal thinking that it’s better to pay more off and that a day or two late won’t matter. Boy was I wrong!
I also applied and received too many credit cards. I didn’t know carrying a multitude of credit cards actually lowers your credit score!
It’s possible that everyone has made regrettable personal finance decisions but I believe that personal finance is a life skill to be learned like the multiplication tables or learning to read. It’s skill that needs to be taught.
Unfortunately, personal finance for kids isn’t widely taught at school but it can be as simple as SAVE, SPEND, DONATE for kids as young as elementary school using fun personal finance games. As they get older, learning about credit cards and how they work should be part of the curriculum.
It’s interesting to me what parents’ think about teaching their kids about money. T. Rowe Price’s 2015 Parents, Kids & Money Survey revealed that parents’ behaviors are often at odds with their concerns about setting a good financial example for their kids. For example:
Parents Want Kids to Learn About Money the Hard Way
- 69% of parents discuss their financial mistakes to teach their kids about money
- 58% of parents let their kids make bad financial decisions so that they can learn from their own mistakes
- 52% of parents think kids should have their own credit card to learn about managing money
- 61% of parents think it’s important for kids to have their own student loans so that they can learn about debt and responsibility
YIKES! I don’t agree with that! I’m worried the mistakes will cost these kids their good credit which will take years to rebuild!
Financial Times Are Improving, But Are Financial Decisions?
- 87% of parents say there is typically money left over after paying monthly expenses
- 53% of people still say that unless they win the lottery, they won’t have enough money to make it through retirement
- 58% of parents with credit cards carry a balance at least occasionally
- 60% of parents have made impulse purchases they regretted
- 61% of kids think their parents worry about money
Do As I Say, Not as I Do
- 82% of parents say they set a good financial example for their kids
- 47% admit to telling kids they can’t afford something when they can
- 40% admit to having a ‘Do as I say, not as I do’ mentality about talking to kids about money
- 72% of parents have some reluctance to talking to their kids about financial matters
Painting a Picture for the Future
- 22% of parents want their kids to be financially independent at age 18
- 85% of parents expect their kids to go to college and 53% of parents regularly save for their kids to go to college
- 79% of parents expect their kids to pay for some of their college education
Wednesday, April 15th
Use hashtag: #TRPKids
During the Twitter party, we will:
- Provide parents with age-specific tips and tools for talking to their children about money
- Reinforce the importance of talking with children — money is not a “taboo” subject and you should share the mistakes you’ve made with your children so that they don’t repeat them
- Encourage families to find teachable moments during daily life (at the grocery store, watching a sporting event, etc.)
I hope you can join me!
p.s. My best trick for teaching kids to save money is to double the money deposited in their bank savings account. The money, however, can’t come out until they are in college.
This is a sponsored post from T. Rowe Price and Scholastic Parent & Child magazine. All opinions are my own including my ideas on how to teach kids about personal finance.