Why Aren’t We Giving Kids Money Habits?
Only a small number of people manage to live independently once they retire. The majority are financially dependent on the government, charity, or the kindness of friends and family. Are we teaching kids money skills that will leave them in the same situation? Jenny Ford, in a rant about the state of financial education, writes that we must put more emphasis on preparing our kids to manage money.
Just 1% (one in a hundred) people were wealthy at age 65. Just one in a hundred Yale graduates - what would the statistic be for those who didn’t have a university education, I wonder?
Another 4% were financially independent. That is, they had passive income (income they didn’t have to work for) which was enough to comfortably cover their living expenses.
That accounts for 41% of the total sample.
The other 59% were in financial trouble. Some just had to keep working, because they couldn’t afford to stop. Others were dependent on government hand-outs or the charity of relatives.
More than half!
This is simply not good enough!
In the course of the normal lifetime, there is ample time to invest and become financially independent. It is generally well understood as to how this can be achieved. We need to be showing kids money habits from a very early age, to ensure that these shocking statistics are not perpetuated in the next generation.
If we are showing kids money habits effectively, then kids will not get sucked into a cycle of debt by credit cards and cell phones. They won’t take out mortgages they can’t afford, or consume the hard-won equity in their homes by travelling excessively or buying depreciating assets like cars and boats.
When it comes to money skills for kids, the buck stops with the parents. We can’t expect the schools to take up the slack here, because most teachers are little better off than their students in money management skills.
In fact, some teachers who do have a background in business or investing have complained that when they try to introduce these topics in the classroom, they have been threatened with disciplinary action for deviating from the curriculum!
As Jenny observes, with life expectancies the way they are now, we are likely to live to see our kids reach retirement age. If they are struggling financially, because they never learned money skills for kids when they were kids, we will actually have to face their accusing eyes and apologise for our failure as parents. Not that the apology will do anything to ease their financial woes at that late stage.
Parents need to be teaching kids money skills alongside basic literacy and personal hygiene skills, as part of the basic life skills package that is required for survival in this day and age.
The ability to be self-reliant increases confidence and optimism, reduces depression, anxiety disorders, crime rates, and school drop-out rates, and even has effects on apparently unrelated statistics like teen pregnancy rates. It is an investment in our country’s future that is well worth making.
