NPR’s Marketplace has been running a series called “Small Town Hall” where they talk to kids about money and financial issues. After watching several clips, I have to say, these are some really smart kids and I started to wonder who taught them these things. Then I wondered who should be responsible for teaching our kids about money.
Parents and Money
Our first money lessons will come from our parents. Kids start to pick up financial information early on, and it sticks. Parents should be mindful of the ways they use and talk about money around their kids. I was fortunate to have financially wise parents who taught me good lessons.
My parents gave me an allowance fairly early. It was a small amount, and they gave me a piggy bank to keep it in. Once I got some saved, I could decide to spend it or take it to the bank. Being thrifty, I hoarded me money, but I do remember going to the store to buy a Peaches and Cream Barbie doll that I picked out myself.
My parents also helped me open my own savings account when I was five and it was so exciting. They took me to the bank where I talked to the woman at the big desk and signed my name on a piece of paper (my dad also signed.) I learned how money grows and what interest is. Of course, interest was 5% back then, so it was more of a lesson than it would be now, but it’s a good lesson nonetheless.
Money Discussions at the Table
Of course, the most important facet of my childhood financial education was our dinner table discussions about money. My dad explained financial concepts we may have heard in the news or at school, taught us about saving up for things, and discussed purchases with my mom. Money was never a taboo topic in our house. My parents were honest with us when money was tight, and when it wasn’t.
Schools and Money
Unfortunately, not every kid has financially savvy parents. In addition to the lessons I learned from my parents, I also took two classes in school that taught me about budgeting and economics. I didn’t take these until high school, however. If we want people to form good money habits, we may need to start teaching money lessons much earlier, like in elementary school.
How Money Works
I recall a lesson in first grade where I had to match up the coins and the bills and figure out how much each was worth. We had another lesson where we learned how to save towards a goal. These are both things that should be taught at home, and most kids will learn how to tabulate money, but they might not learn how to save for a goal if their parents aren’t financially savvy. The earlier we can drive this lesson home, the better off our whole society will be.
I took what was essentially a budgeting class in high school. The first was what they called a marriage class, but it had way more to do with money than it did with relationships. Each class member was assigned a spouse at random. We were then assigned jobs, salaries, debts, mortgages, and number of children/age. From that, we had to develop budgets. Throughout the quarter, the teacher also presented us with financial challenges and bonuses at random. For example, my “husband” was a butcher and I was a secretary. We were faced with a major medical expense on our small salaries. We were supposed to work out budgets together, but it seemed that most “couples” saw one partner take the lead because the other was clueless. For example my “husband” thought he should buy a Corvette with his butcher salary and would not be deterred until I took the checkbook away from him. I learned something, but I’m not sure my “husband” did.
Word of warning to anyone planning to introduce this class: do not let real-life couples be married in the class. At one point, a girl got so upset about a lesson that she grabbed her boyfriend/”husband”‘s backpack, threw it out the door, and ordered him not to come back.
Economics and Investing
After completing my marriage class, I took economics. In addition to lessons about the basics of supply and demand, we each received a packet with the materials for operating a business on paper. We learned about profit and loss, budgeting, sales, expenses, income, etc. We also had a section on investing. We had to pick one company, monitor its stock, and then present a financial report at the end of the quarter that also included information we’d gathered about the company’s goals and finances.
All of the above laid the groundwork for my current financial situation. Yes, I could have learned it as an adult, but it was much easier to learn it at home and in school. While I wish kids would learn this at home, schools need to provide some financial lessons as a buffer for those kids who don’t learn good lessons at home.