Dear Parents: You Need to Teach Your Kids About Money
Author Johann Wolfgang von Goethe once said: “Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” While America’s education system provides lessons on a variety of subjects, not nearly enough time is allocated toward personal finance. Instead, parents are responsible for taking the time to teach their children about money, and research shows they should start almost immediately.
The consequences of poor financial literacy are at record highs as the economy becomes increasingly bifurcated. Young adults lacking financial acumen could easily find themselves saddled with decades’ worth of student debt and an impractical degree, consumer debt at near-usury interest rates, or a woeful retirement consisting of ramen noodles. In fact, negative side effects are already being seen among the nation’s largest generation.
Millennials — generally considered those born after 1978 — are showing problematic financial behaviors. According to a recent study by the Financial Industry Regulatory Authority, only 24 percent of millennials are able to answer four or five questions on a simple five-question financial literacy quiz correctly. That figure drops to only 18 percent among ages 18 to 26. Making matters worse, 46 percent of millennials worried about having too much debt, while 43 percent engaged in non-traditional borrowing in the past five years, including pawn shops and pay-day lenders.