What your kids should know about money


Young people need financial education more than ever

By Brett Arends

Last Update: 4:56 PM ET May 3, 2013


Thats the succinct verdict of Wall Street legend Muriel Mickie Siebert, when asked to describe the state of financial education in our schools today.

We teach kids Tasmanian history, she jokes, but not the stuff they might actually need, like how to balance a checkbook, how to handle credit cards, or how to evaluate the full costs of owning a home or leasing a car. They dont know, she says of young people, and they dont know because theyve never been taught it.

According to a survey by the Council for Economic Education, a nonprofit, just 22 states require high-school students to take a course in economics, and just 14, a course in personal finance.

And we wonder why we have financial crises.

Siebert has been working in the financial field for over half a century. She was the first female member of the New York Stock Exchange back in the 1960s (I made the stock exchange co-ed, she jokes now, before recalling how, when she first joined, her ungallant fellow members wouldnt tell her how to find the bathrooms.) She encountered the state of financial education when she became the New York State Superintendent of Banks in the 1970s and met high school students as well as parents who were already deeply in financial trouble.

Today shes championing financial education in schools, and shes paid for professionals to create teaching modules for middle schoolers and high schoolers. The modules are being taught in some school districts in New York and elsewhere. Shes hoping other districts will take them up.

I suspect kids will take a lot more interest in class if its actually going to be useful to them, as these courses should be. (I have dim memories of many wasted hours in high school drawing cross-sections of arable land and tubers.)

Its nuts. We dont let people drive without taking a driving test. Yet we drop young people into a chaotic financial world without the basic survival skills they need. And its much worse than it used to be. They will not have secure jobs, defined benefit pension plans, or any of the other financial stabilities that previous generations enjoyed.

As it happens, shortly after talking to Siebert, I got to talking to Ron Lieber, a columnist and editor for the New York Times. He too is worried about the state of financial education. Hes taken a leave of absence from the Times they still have those there to write a book about teaching your kids about money. The book has the brilliant title The Opposite of Spoiled.

Lieber agrees with Siebert about the shortage of good financial education in schools. But he highlights two further issues.

The first is a core one. Money, he points out, is about values. There is a direct connection between how we think about money and the values we want our children to embrace, he says. And that teaching, he says, sensibly, needs to be in the home.

If we want to teach children virtues like modesty, thrift and patience, Lieber says, we can use money early on to help instill those lessons for example, by giving a child a $3 weekly allowance with the instruction that he or she must save at least $1 for a future purchase, and give at least $1 to a good cause.

Making children save teaches them early on about the trade-offs between spending now and spending later. And making them give $1 teaches them the true value of a dollar, the needs of others, and how to research worthwhile causes.

Lieber highlights a second issue about financial education that often gets overlooked by the older generation. Kids today have to deal early on with a massive financial problem that previous generations simply didnt face: The outrageous cost of college.

The price of this institution has skyrocketed, even while family earnings have stagnated and savings have, in many cases, eroded. Today even a bachelors degree at a state college can easily cost $100,000, and at a private school its much more. Seventeen-year-olds are left trying to evaluate these choices, and whether or not to go deeply into hock to pay for it. It is, says Lieber, flat-out insane. This is basically a new topic, and many parents are failing to train their children for it properly because it is so new.

Money is about values. Money is a survival skill in the jungle of the new economy. We need to teach it more, and better.

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