TimmyHAn economy in crisis offers plenty of raw material to teach kids about money
March 11th 2009 20:55
The economic crisis is providing a teaching moment about the perils of financial ignorance for parents and children alike.
Millions are learning the hard way about the pitfalls of teaser mortgage interest rates and runaway credit card debt. Sadly, their kids might be doomed to repeat the mistakes.
Financial instruction is skeletal at best, educators say. Youngsters who Twitter, text, and blog with ease are clueless when it comes to balancing a checkbook or understanding retirement savings.
"We've been going for years without that education, and it's one of many factors contributing to the whole mess we're in," said Karen P. Varcoe, a consumer economics specialist for the University of California.
The good news, Varcoe said, is that teenagers are keenly interested in learning about money. Arming them with fundamentals might help them weather the next recession.
But it's a dangerous cycle, said Adam Levin, chief executive of the consumer education site Credit.com: Parents are so preoccupied with or embarrassed by their financial affairs that they don't have time to mentor their kids about money. Cash-strapped schools are struggling simply to teach the three Rs. And many businesses have no incentive to teach future customers how to read the fine print.
"Finance companies are better off with customers being financially illiterate," Levin said.
Many young people agree that good money habits and setting financial goals are critical to success, according to surveys. But high school seniors correctly answered fewer than one-half of the questions on a 2008 test of basic finance knowledge, said the Jump$tart Coalition, a financial literacy group.
Nearly three-quarters of the 1,000 teens surveyed for the Charles Schwab financial services company in 2007 predicted an average annual salary of $145,500 for themselves. But just 13 percent knew what a 401(k) plan was.
Last spring, more than 46,000 teenagers took a personal finance test from the Treasury Department, but only 35 students achieved a perfect score. Currently, only nine states require students to demonstrate proficiency in personal finance.
Paul D. Golden, a spokesman for the National Endowment for Financial Education, said his parents never talked to him about finance. "Money is still a taboo subject, and the concept is becoming less tangible," he said. "Kids see parents punch in numbers at an ATM and watch as it spits out money."
But as the economy worsens, demand for financial education seems to be booming. Websites including PracticalMoneySkills.com and Bank High School offer free lesson outlines, worksheets, and activities. And in the summer, Creative Wealth International puts on Camp Millionaire programs for children.
Read More Here:
Really Long Link
By Tiffany Hsu
Millions are learning the hard way about the pitfalls of teaser mortgage interest rates and runaway credit card debt. Sadly, their kids might be doomed to repeat the mistakes.
Financial instruction is skeletal at best, educators say. Youngsters who Twitter, text, and blog with ease are clueless when it comes to balancing a checkbook or understanding retirement savings.
"We've been going for years without that education, and it's one of many factors contributing to the whole mess we're in," said Karen P. Varcoe, a consumer economics specialist for the University of California.
The good news, Varcoe said, is that teenagers are keenly interested in learning about money. Arming them with fundamentals might help them weather the next recession.
But it's a dangerous cycle, said Adam Levin, chief executive of the consumer education site Credit.com: Parents are so preoccupied with or embarrassed by their financial affairs that they don't have time to mentor their kids about money. Cash-strapped schools are struggling simply to teach the three Rs. And many businesses have no incentive to teach future customers how to read the fine print.
"Finance companies are better off with customers being financially illiterate," Levin said.
Many young people agree that good money habits and setting financial goals are critical to success, according to surveys. But high school seniors correctly answered fewer than one-half of the questions on a 2008 test of basic finance knowledge, said the Jump$tart Coalition, a financial literacy group.
Nearly three-quarters of the 1,000 teens surveyed for the Charles Schwab financial services company in 2007 predicted an average annual salary of $145,500 for themselves. But just 13 percent knew what a 401(k) plan was.
Last spring, more than 46,000 teenagers took a personal finance test from the Treasury Department, but only 35 students achieved a perfect score. Currently, only nine states require students to demonstrate proficiency in personal finance.
Paul D. Golden, a spokesman for the National Endowment for Financial Education, said his parents never talked to him about finance. "Money is still a taboo subject, and the concept is becoming less tangible," he said. "Kids see parents punch in numbers at an ATM and watch as it spits out money."
But as the economy worsens, demand for financial education seems to be booming. Websites including PracticalMoneySkills.com and Bank High School offer free lesson outlines, worksheets, and activities. And in the summer, Creative Wealth International puts on Camp Millionaire programs for children.
Read More Here:
Really Long Link
By Tiffany Hsu
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