As millions of YouTube videos will verify real-life can be very funny. However, it can also be very hard, especially if you aren’t prepared for it. Recently, numerous studies have come out supporting what many parents already know – kids today are not prepared to make financial decisions they will be forced to make as adults. Add to this a growing generation of kids with a poor work ethic and growing sense of entitlement, and many believe our economic future is in deep trouble.
Right now in the U.S. kids aren’t learning enough (if anything at all) about basic finance, even though these are skills they would use the rest of their lives. Depending on the high school they attend, teens may be required to take a combination of foreign language, high-level math and high-level science in order to graduate. Why not finance?
Is learning how to speak French more important than learning about interest rates and credit cards? Is figuring out the value of X more important than knowing how to plan a monthly budget or save for retirement?
According to a 2013 report by The Center for Financial Literacy at Champlain College on the financial education in each state, only 20 states received a grade of A or B. Debates are now being held in almost all states over whether or not a standalone finance course and a test should be required for high school graduation. This should be a non-issue since personal finance knowledge will be used more than any other knowledge set throughout a person’s lifetime.
If you have a child between the ages of 5 and 17 and are concerned with what he or she knows about earning, saving, sharing, spending and budgeting money just watch out for these signs that your child could be heading toward financial failure and take corrective action at the first sign of trouble.
Your Child Could be Heading Toward Financial Failure If He or She:
Is Older Than 7 But Still Putting Money Into a Piggy Bank.
Piggy banks can be a cute way for a youngster to learn about nickles and dimes, but after age seven they serve no purpose. If your children are old enough to earn money they are old enough for their own bank account. It’s a great opportunity for them to learn how a bank works, use online banking and begin to understand interest (though it’s not what it used to be).
Thinks Credit Cards are Free Money
Some kids think that credit cards represent free money banks give away for people to buy things. Until your children have a clear understanding of the difference between debit and credit cards and how cash advances, interest rates, penalties and fees work, they shouldn’t have a card. Each time you swipe one of yours take the opportunity to explain the ins and outs of credit to your kids.
Learns About Finance From Comic Books
A year or so ago, one of the largest financial institutions offered a comic book where a well-known superhero fought a villain over bad financial decisions. If your children can’t learn about this important subject in school, let them learn from your experiences not a comic book. You can become the superhero.
Thinks “National Debt” Only Refers to the Nicholas Cage Movie
While most teenagers have some idea what the National Debt is a majority don’t know what it means to them. The National Debt now stands at over $16 trillion, meaning a baby born today is $51,501 in debt. Tell your children that they owe you more than $51,000 and see what reaction you get. Helping kids to understand how this number affects them is the first step to managing it.
Thinks that Budget Refers to a Rental Car Company
According to a recent Gallup Poll, 67% of American adults don’t have a monthly budget in place or a long-term financial plan. Since kids learn a great deal by watching what their parents do it’s important for you to set a good example for your children and budget. Also, share the budget with them so they have a better understanding what constraints there are and how they can help meet family goals.
Swears that the Term “Interest Rate” Means How Popular Something Is
The best way to remember how interest rates work is the rate will most likely be high when you are paying back money and low if the bank is paying you money. Talk to your kids about interest rates in regards to credit cards and car loans since they will come in contact with those first.
Turns Down A Good Summer Job Waiting For The Perfect Job
Though it might not be the perfect place, it’s a job. To ease their pain over not having a glamorous gig, tell them if they are saving for college or a car, you will match their savings as an extra bonus for being responsible.
Many of these financial doom warning signs can be used to avoid a negative future if you start your children early on a routine of completing jobs around the house and rewarding them with an allowance or by another means. By starting around the age of 5, kids can learn work ethic, responsibility, accountability and how to manage money wisely. Using an educational tool like MyJobChart.com will help parents assign jobs, motivate kids and reward successfully completed jobs. With MyJobChart.com kids use the same technology (smartphone, tablet or laptop) they spend hours on now to see their daily schedule and decide how to save, share or spend their rewards.
No matter how you decide to position your children to be successful financially as they grow remember that education, communication and hard work must be part of the plan. Otherwise, we’ll end up with a generation that thinks the Debt Ceiling is the maximum amount that can be charged to their credit card. By the way, it’s not.
As the Chief Executive Officer of My Job Chart, Murset has committed the last four years to building the largest online community and fastest growing website teaching kids about work ethic and making smart money decisions.
MJC was born from real life experience. Murset is a father of six children (ages 6 to 16) and needed a way to teach them about earning, saving and spending money. With no system available for a family with a large range in ages, Murset came up with the idea to combine modern technology with the traditional allowance system to teach responsibility, accountability and the fundamentals of financial literacy.