With financial issues dominating news headlines, this is an especially good time to teach kids about money. And they could use some help. An LA Times article noted that many of today’s youth are already exhibiting the over confidence and lack of knowledge that have gotten so many adults into trouble. For example, a Charles Schwab study found nearly 75 percent of teens predicted an average annual income of $145,000 for themselves while just 13 percent could define a 401(k) plan. The article described a recent financial literacy event sponsored by Junior Achievement that took place in a California high school. Students were assigned adult identities, incomes, and all the usual adult bills. Discovering that even having your trash hauled away costs money, one student mumbled, “I don’t want to grow up; this stuff is expensive” Others had a more positive experience. One 18-year-old said, “Now I realize how many bills there are to pay. But knowing that makes me feel safer, because I know how much I can spend.”
Children’s financial habits are shaped in large measure by what they learn from their parents, although apparently most of that learning is by observation. Just 30 percent of teens surveyed by Schwab said their parents tried to provide them with financial education.
Organizations that offer personal finance teaching materials for children include Junior Achievement, the JumpStart Coalition, and the National Endowment for Financial Education. Want to test your teen’s money know-how? Have them take this quiz. In fact, try it yourself.