Poll: Parents Must Shoulder Burden of Youth Financial Futures
Financial literacy statistics clearly show that today’s American youth lack key financial knowledge. But who should be charged to teach our kids how to manage money? In a recent poll by the National Financial Educators Council (NFEC), more than half of respondents said they believe this responsibility should fall on parents’ shoulders. And when we asked a group of parenting and financial professionals to weigh in, most of them concurred. They also provided some advice on how parents can become involved in promoting youth financial literacy.
One important way for parents to be involved with their children’s financial education is to provide them with opportunities to practice with money. Sonja Redden, a parenting coach for Tranquil Parenting in Michigan, says she would prefer to see children make financial mistakes many times over in a practice situation, if it will help them avoid the consequences of making those mistakes as adults. Parents’ financial behavior influences children’s behavior because, according to Redden, “If children see that mistakes happen and that their parents pre-plan their money they see what is normal. If parents do not involve the children then they have no experience and think their life is a mess once they make mistakes as a young child.”
Perhaps society as a whole lacks initiative to teach children the importance of financial responsibility from an early age. That’s what Vic Patel, founder of Forex Training Group in New Jersey, thinks. Middle and high schools offer little or no practical curriculum for managing personal finances or investments. And since schools are not tasked with this type of education, “Then it is imperative for us, as parents, to take on this responsibility,” Patel says. In Patel’s opinion, it’s all about benefit: “Only when we teach our children the importance of Credit, Personal Finance, and Investing, can we expect them to handle their money and finances in a manner that will benefit them throughout their lives.”
According to responses to this financial literacy survey, a parent’s primary job is to educate his or her children. Parents are the first models kids see, whether in regard to how to treat others, avoiding hot objects, or cleaning up one’s own messes. Kids learn from watching their parents, whether parents realize it or not. And, says Andrew Bush of Horizon Wealth Management, “Those parents who don’t position themselves or see themselves in that role are doing everyone a great disservice. Kids see how parents act throughout their upbringing and figure, here is a standard…this is what is acceptable.” Those standards extend to money behaviors too. As Bush mentions, “Bad behavior begets bad behavior…kids will see this way as acceptable and act as they have been modeled or they will themselves say, I will never live like that and find their own means to improve their situation.”
Sally Elizabeth of PeopleClaim.com sees the effects of financial illiteracy firsthand, as she fields claims about money scams to which people fall prey. She believes on a personal level that parents should encourage children to work and use the money they earn wisely, and Elizabeth puts her beliefs into practice. “Both my kids have Roth IRAs, even though they can only put in a few hundred dollars (or less) each year. But I was proud that my eldest, living on a $27,000 fellowship in DC, was able to put aside enough money to go on a trip to Australia and New Zealand. Awesome! Life is to be lived.” On a professional level, she recommends that parents teach their kids about the increasingly sophisticated financial scams being propagated online. “We recently fielded a complaint by a father about a Money Transfer scam that not only drained his daughter’s account of more money than she had, but also got HIS account closed,” Elizabeth explains. “The scammers targeted her through the jobs boards. And just today we received yet another complaint about an Advance Fee scam that left an already broke claimant unable to pay the bills.”
Regardless whether parents answer the call to teach their children about money, their potential influence on their kids’ future is clear. If everyone chips in to do their part to build our youth’s money management foundation, the financial literacy statistics can only improve.
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