NMCM All Things Family Blog

In a rant about the state of financial education, Jenny Ford writes that we must put more emphasis on preparing our kids to manage money. She questions whether we are teaching kids about money habits that will serve them well? Only a fraction of people manage to be financially free in retirement. Most are financially dependent on the pension, handouts, or the generosity of family and friends.

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!

There is plenty of time in the average life to amass assets and become independent. There is enough knowledge in our knowledge bank as to how this can be achieved. We need to be showing kids money skills from a very early age, to ensure that these appalling statistics are not perpetuated in the next generation.

If we are showing kids money skills effectively, then kids will not get sucked into a whirlpool of debt by cell phones and credit cards. 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.

If you think about it, teachers go from being school students to being university students and then back to school, having little or not exposure to the world of business and investing. The curriculum is admittedly inadequate when it comes to financial literacy, so where are teachers supposed to gain the money knowledge that will enable them to teach it to our kids in schools?

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 management 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 about money habits 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.

When we are showing kids money skills across all income brackets, we will see less crime, fewer twenty-something bankrupts, and an overall spirit of optimism that is sadly lacking in the apparently careless, instant-gratification-focused Generation Y.

Tags: Kids & Teens

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