In honor of Financial Literacy Month, let us talk about how important it is to teach our children financial literacy. The impact our finances have throughout our lifetime on the way we live is immense, that is why it's never too early to start learning about money. Since the 2008 financial crisis, financial literacy programs have skyrocketed. Schools are developing financial literacy curriculums and after school programs, while many non-profit and for-profit organizations are also taking this initiative.
Financial Literacy in Schools
Carol O'Rourke, Executive Director at The Coalition for Debtor Education, an independent non-profit housed at Fordham Law School, teaches financial literacy at city schools in New York through a game called Financial Jeopardy.
"We use a game show format, with categories like saving, banking, safety, and needs and wants to get the students engaged," she says.
They are expecting a boring class, says O'Rourke, not a lively discussion about if a cellphone is really a "need" or if a student loan is a good investment. The class is divided into teams, so everyone gets involved and it becomes competitive, with everyone vying to get the most points. The discussions are interesting to the students because they talk about the things that they spend money on now.
Credit Card Debt
The "2012 Financial Literacy and Credit Cards: A Multi Campus Survey," published by the International Journal of Business and Social Science found that 70% of undergraduate college students had a credit card and just over a third (33.9%) had only one credit card. This leaves approximately 36% of college students with two or more credit cards. However, according to the survey, only 9.4% of students paid their credit card in full each month, leaving most students (90%) with some indeterminate amount of credit card debt each month, subject to high interest and other charges. Given these troubling statistics, it's very important to teach children, while they're still young, to stay away from debt and show them the best ways to handle the money they receive from babysitting, delivering newspapers or any other part-time jobs that college-aged people tend to have.
The Bottom Line
Teaching children about financial literacy is very important if you want them to grow up to be financially responsible adults. Kids will take a greater interest in financial literacy if the topic is engaging and fun. However, nothing is more important than making open money conversations a regular part of their upbringing.