SchoolFinder Blog

Even Smart Students Are Financially Illiterate

Today’s post is brought to us by J.M. Seymour. J.M. Seymour is an author of financial education materials, including the award-winning Stock Market Pie:  Grandma Helps Emily Make A Million. Click here for a free copy.

Many American teenagers have aspirations to be rich and famous—world-renown scientists, actresses, Olympians, or the next Donald Trump.  The trouble is, these same teens let plenty of money slip through their hands.  Many spend over $100 a week, more pocket change than any other generation of teens, according to Teenage Research Unlimited. 

Because they are busy learning to spend, rather than save and invest, these teens do not hone financial skills. The result?  Skyrocketing credit card debt, dwindling saving rates, more bankruptcies, lost opportunities for wealth, and young consumers who make easy targets for con artists. 

Few parents teach money management skills, expecting kids to absorb the basics and learn the rest in school. Even the academically talented aren’t getting it. 

For example, Indiana is among the states having the most personal bankruptcies and mortgage foreclosures per capita, even though high priority is placed on education and academic standards, acknowledges Barb Beadle, state program specialist with the Indiana Department of Education.

A 2008 survey conducted by the Jump$tart Coalition for Personal Financial Literacy reveals that high school seniors fail personal finance, however, more states are requiring students attain basic skills in personal finance before graduation. Beadle said she considers that knowledge a necessity. “Every student needs at least one semester of personal finance,” Beadle said.  “Financial illiteracy knows no demographic or economic boundaries.  It affects everyone.”

How can savvy parents and teachers keep students ahead in financial education?

Walk the talk. 
Students learn to spend, save, and invest by modeling behavior.  Include them in discussions—how major purchases are made, where vacation money comes from, what college costs.  Discuss how making choices impacts financial abilities downstream.  Compare income potential of career choices, years of college needed and years needed to repay loans.

Invest in learning to invest.
Teach students not only to save money, but to use it as a tool to make more money.  Astute fifth and sixth graders can grasp concepts, such stock market basics. Local libraries are great resources, or check www.sec.gov/investor/students/tips.htm, www.treas.gov/kids/index.html, and other websites.  

Get real. 
Nothing like real cash grabs attention.  Help kids find good investments and keep track of them.  One good habit any investor can start is using an investment journal. Consider supervising a mock stock portfolio or investor education club.  Check out www.sharebuilder.com for beginners with small amounts.

Help students practice what they learn—start young.
Saving and investing aren’t punishment, so make it fun. Set goals and give rewards. Successful investing takes practice, just like learning to swim or play piano.

Saving and investing doesn’t require fancy equipment, uniforms, or lots of money. Teaching skills to help students become wealthy is not an expensive proposition…but failing to teach them is.  Help them get started.  The road to becoming a millionaire awaits.