Why You Should Teach Your Kids About Finances
There are many reasons you should teach your kids about finances.
Here are some of the many reasons I think youth financial education is important.
1. Money and kids are important.
Youth financial education is important because money and kids are important.
In one manner or another, money and what it represents, most notably time and energy, are intertwined to all human activity.
If you want to educate kids or adults, you are going to need money. If you want to do research on climate change, you are going to need money.
If you want churros, chips or a college savings account, you are going to need money.
Regardless of whether you are born with a little or a lot of money, people, including kids, who understand how to manage it, earn it and trade for it typically do better in life.
People with great money habits are also better positioned to help others.
Mother Teresa understood this. She did not advocate people come to Calcutta to save the world. She advocated people start with themselves by focusing on becoming self-sustaining and working outward from there.
Conversely, people with poor money habits and a lack of financial knowledge tend to do worse.
2. Financial habits start early and can last a lifetime.
This is going to stagger some, but a recent University of Cambridge study revealed adult financial habits are formed prior to age 7.
I have more than 12 years of experience in early age financial education. I have talked to more than a quarter of a million children.
This leads me to believe the study is on the money.
It also happens to be consistent with the vast majority of other research on early age education regardless of the subject.
Hopefully, the recent subprime lending debacle, rising youth credit card debt and a general lack of savings at all age levels has taught us poor money habits can reek havoc and devastate lives, particularly young lives.
“Reversing bad habits is more
difficult than maintaining good ones.”
3. Children are easily impressionable.
Children are inundated from birth with financial messaging overwhelmingly related to consumption.
In other words, whether you like it or not, youth financial education is taking place. It just is not necessarily the kind of financial education you may want your child to have.
4. Kids can influence financial decision-making.
Kids of all ages have access to and influence over an enormous amount of financial decision-making.
They can influence financial decision-making, even though most do not earn money or know little about it.
That would include food, toys, videos, clothing, cell phones, cars, etc.
5. Kids will learn to weigh decisions.
Personal finance and economic education requires an individual to practice weighing out choices.
Weighing out choices is a skill with universal applicability and benefits. It can be acquired as a child and leveraged for a lifetime.
6. Kids can make their money grow.
Compound growth (interest) works best the earlier you activate it in your favor.
It works worst for you the earlier someone else activates it to your disadvantage.
Youth financial education, like all education, is a process, not a silver bullet. It requires repetition for mastery.
It does not guarantee a person will always make great choices. It does guarantee they will be at an advantage to make better, more informed decisions to pursue happiness.
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