These articles were very distressing to me in my morning newspaper reads:
Star Bulletin: Education Dilemma.
PBN: Economic literacy: students know as little as their parents.
“Does money hold its value well in times of inflation? No, but 36 percent of Hawaii students answered “yes,” and 22 percent said they didn’t know, according to a survey by the University of Hawaii Department of Economics.
As reported to the attendees of the 2004 Hawaii Economic and Financial Literacy Conference in Waikiki yesterday:
521 students (at 19 public high schools from all seven school districts across Hawaii) were given 20 multiple-choice financial questions. The average student got 11 of the 20 questions right. The group score was 54 percent.”
A few years ago I picked up Robert Kiyosaki’s book Rich Dad Poor Dad at an airport newsstand, and it made a huge impact on me. Kiyosaki is not a fan of the financial education given—or not given—in our schools. Reading his book, I thought about the two teenagers I had at home, and I vowed that I would begin their financial education myself.
We started with simple things: I got them each their own checking account with a cash card to use while shopping, and opened savings accounts in which any future cash gifts would go. I made the first modest deposit in each account: I would double it when they each finished reading Rich Dad Poor Dad for themselves. (Not sure how bribery rates in good parenting, but in this case it did the trick.) That Christmas, one of their gifts was their own brokerage account in the USAA First Start Program: through-out the year we’d make small monthly deposits to UTMA Mutual Funds on their behalf. We’d match their own voluntary contributions. Quarterly we’d talk about their statements, and in teaching them I had to get more intelligent about it myself.
This past year, we took a huge step with my daughter’s financial education: she went through the entire real estate purchase process with me for an O‘ahu condominium, looking up her own credit history we thankfully had established those years prior, evaluating the mortgage options we had available, and earning the right to put her name alongside mine on the deed. She has a monthly budget designed to pay herself (her equity) first, as she juggles college with a job and her living expenses.
I’m sharing my story with you to encourage you: the best and easiest way to prepare your kids is to let them in on your life. Create a family budget and explain it, stick to it and evaluate it on a regular basis. Refinancing? Starting a Christmas savings plan? Planning a 401k rollover when you change jobs? Talk about these things at the dinner table.
Don’t wait for the schools to do the job you can do best.