We sign our kids up for after school sports or orchestra or the drama club because they are good activities and teach important skills: persistence, discipline, making trade-offs. They can look back after the semester and see how far their hard work and consistent practice has gotten them. Yet we don’t approach their financial education the same way, if we approach it at all.
The financial industry’s regulator found in a survey¹ that younger people were less likely to be financially capable than older people. Some 26 states have no financial literacy requirements in their schools, from the youngest grades all the way through high school. Just four states require children to take a personal finance class in high school.
We know how problematic this can be over the long-term. People with a high degree of financial literacy are more likely to plan for retirement and build wealth. People who lack financial know-how are more prone to paying more for financial products and accumulating less wealth, according to another study², by TIAA-Cref.
For more information on how to get going, download a free workbook filled with games and activities to help initiate discussions about money with children of all ages.
Sources:
1) http://www.usfinancialcapability.org/results.php?region=US
2) https://www.tiaainstitute.org/public/pdf/institute/research/dialogue/97b.pdf
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