Teaching kids financial literacy: practical, fun learning

[Irulan]

Do we really need stage shows with rap to teach finances?

My parents didn't do much except teach me to not answer the phone if they thought the bank was calling. I learned a lot as an adult.

As for kids, every moment can be a lesson. I think one of the first ones at our house was figuring out just how much extra you were paying for that Happy Meal toy.

[Tri Girl]

Do we really need stage shows with rap to teach finances?

Sadly, yes.
I teach personal finance to middle schoolers. As with all the grades that I teach (preK-8th), if you are not wildly entertaining- they tune you out. Sad but true- education/teaching/school is not what it was when I started out 15 years ago. It's a dog and pony show on crack now.


I teach at a Catholic school in an upper-middle class area. Most of our students want for very little in life. In my personal finance class I tell them I shop only at resale/consignment/thrift stores and that I purchase many things that are used. I tell them how we save so we can pay cash for things that we need (new tires, things that break in the house, vacations, etc) and that you don't have to live dependent on credit cards. I have also told them that I used to have big credit card debt and that I've learned from my past mistakes and don't feel I need to have "all that and a bag of chips." I have no problem showing them the other side of things (other than what they are used to). I teach them to save money on groceries, etc. It's also who I am: very eco-friendly. I try to show them that you can live very frugally (not by choice in my case) , and still be VERY fulfilled and happy and have everything you need. I want them to know that they don't have to live a life of excess (which many of their families do) to find happiness and fulfillment in sharing what you have with others. Many of our families are very generous with their time and treasure, too. Someone has to show them there's an "other" side out there in case they are not shown that in their own life.

[Blueberry]

I've had to teach myself.

As I've posted other places, my (long divorced) parents are both in financial trouble now (massive credit card debt and dad is probably a compulsive shopper). This is not the first time for either of them. I'm in my 30's. They've asked/expected me to help them out to differing degrees. Saying no to that has been a hard lesson for me - but I have to look out for my own (and my DH's) financial security now.

[Pax]

We were pretty poor when I was a kid, military pay was abysmal and every move meant lost pay records and a couple of months with no paycheck for my dad. Famous family story about moving across country (pre interstate), once the packed food ran out we would stop to eat and my folks would order two hot dogs, my brother and I ate the dogs and my mom and dad ate the buns.

I learned that to not pay your bills meant you were trash, no matter what - if you incurred a debt you paid it back as promised. When I lived in Chicago as a 20 year old I was so poor I'd have something like 1.83 to last a week after I paid my rent and utilities; my choices were to buy peanut butter OR buy a paper to look for a better job. I ate a LOT of plain bread in those days.

The other thing I learned from my folks was to pay cash for everything I possibly could. So except for a mortgage and an occasional (used) car payment, I don't have any debt these days.

[Pax]

Another thought... I bet it's harder for kids today to manage debt, we couldn't get credit cards and NO bank would loan you money if you were poor, so we never really had that issue.

The college students who work for me all have credit cards and think nothing of charging a pizza four nights a week. Long gone are the days of pooling your change with your friends to see if you could scare up enough to buy dinner.

[owlice]

I like the book "The Millionaire Next Door" for teaching the value of frugality and living below one's means.

(My son, who is now 18, would definitely NOT respond to rap, except to tune it out/turn it off.)

We talk about money in our house; we always have. Why we comparison shop, how to look for value, saving for the future, how much things cost, including things like water and electricity.

When the kid was very small, he was very into Yu-Gi-Oh cards, and his dad and I used to buy them for him. When the kid was a little bigger, we started giving him an allowance which allowed for his purchasing his own Yu-Gi-Oh cards, and suddenly, the kid "needed" far fewer of them. He learned to save his money; a good measure of how much he wanted something was to test whether he'd spend his own money on it, or share the cost of it.

I think it's very important to give a child all he really needs and some of what he wants, and give the kid an allowance that lets him buy/save for some of his wants; if he needs more, then he can work for the extra cash (doing extra chores -- over and above the normal ones -- to earn it, or earning it some other way). Kids, and some adults, too!, need to learn the difference between need and want, and experience is often their best teacher for this.

All that said, I also believe in teaching a child to take advantage of opportunities that arise; in our house, this is phrased as "Money can be replaced; opportunity (often) cannot." Spend money on experiences that enrich life, not on crap that needs dusting!

Not that I've given much thought or have many opinions on this topic....!

[Crankin]

Owlice, I agree with you.
Our kids got a small allowance and there were many times that the 2 of them were pooling their savings, birthday/Chanukah money to make a trip to the mall to buy a computer game (back in the olden days of the 90s). We bought them "experiences," as well the necessities of life. We paid for their gas/insurance in HS/college, as long as they didn't wreck the car and did the errands we requested of them. They both started babysitting at age 11-12 and made a considerable amount of money doing that in middle school. They were the only ones in their social circles who worked in HS. Not a lot, we didn't let them work more than 10-15 hours a week. The oldest one worked at Rite Aid, got sick of "looking at 200 brands of tampons," and got a job as a barista/sandwich maker, which he held for 3 years (where Marni was one of his managers!). He did the same thing in college. Younger one worked at a bike shop and a natural foods store.
I think our kids absorbed the financial values they have by observing how we spent our money. They both like very nice things, but live well within their means and still are able to do things like explore restaurants, buy stuff for their homes, etc. Oldest one and his wife have been approved for a first time buyer's home loan on a not so exorbitant salary, no small feat around here, where a starter home is in the 250-300K range. Younger son got a huge re-enlistment bonus a couple of years ago when he decided to stay in the Marines, invested it well, with our advice, and now has a nest egg most 50 year olds would be jealous of. In fact, his older brother, who graduated from college and has a "professional" job, is quite jealous... until I remind him that his brother might make the ultimate sacrifice for his $.

[Irulan]

Another thought... I bet it's harder for kids today to manage debt, we couldn't get credit cards and NO bank would loan you money if you were poor, so we never really had that issue.

The college students who work for me all have credit cards and think nothing of charging a pizza four nights a week. Long gone are the days of pooling your change with your friends to see if you could scare up enough to buy dinner.

Be assured not all college kids think like this. Son #1 got through school debt free, and now that he's working he just bought a house with a very reasonable down payment. He goal is to retire as a millionaire. He's very good with money.

Son #1 likes to live on the cheap.(ie, choosing the ramen and sack of carrots menu)

We did show our kids the power of compound interest, and went over certain kinds of expenses with them. I'd show them a credit card bill and how to read it, what everything meant. They had to work and save for certain things that I just wasn't going to buy for them: a Nintendo, for example.

Certainly they learn from example. We've pounded into them the evils of credit and spending more than you have, and it's nice to see them "get it".

[Antaresia]

My mom took care of the finances growing up, she didn't work and there were 5 of us. I don't remember any lessons, but I know absorbed a lot. I don't budget, but my spending habits are pretty tame and I manage to save a bit of money every month.

Hypocritical as that sounds, seeings as how I just spend all of last night reading up on the "wool wennies" thread and now have 3 items in my cart from Smartwool. A year ago, if you told me I would buy a $20 pair of socks I would have said you were crazy. It feels kind of crazy.