Will your kids be able to deal with their money?

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.”

Yikes!

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.

Comments

  1. says

    What does ‘financial literacy’ mean to you?

    In our talk story Friday, Tom Ehrenfeld mentioned how something really bothers him: “”the creation of a new class of people who are in permanent debt. Between the relaxation of standards for credit card companies (which now charge usurious rates

  2. Peter says

    it says here http://www.moneysavingfreetips.com/401k-rollover-rules.html “Before the new law, investors could only transfer their retirement savings from one 403b plan to another 403b plan. However with the new law, the investors can transfer their funds from a 403b plan into a 401k plan, other 403b plans, 457 government plans, IRA or even profit-sharing plans with employers or other investors.”
    does anyone know exactly how it works? where can i find its paperwork?

  3. says

    Sounds like a question I would personally double check on with my own acccountant or banker Peter, deferring to their expertise and knowledge just to be safe – and to maximize your invested dollars in the best way.

  4. says

    Dont wait for the schools

    We have always been looking at the schools to be the only source of education for our children.   But personally, I see that in terms of financial knowledge, parents should also do their part in assisting and  ensuring that their children  has certain …