With millions of children returning to the classroom, most parents are happy that professional teachers have regained control of education
process. However, there are still some areas that require parental involvement, including financial literacy. Over the years, many people have regretted the low level of Americans’ understanding of basic financial concepts. They believe that only by teaching these concepts in the country’s school system can we cultivate a generation of smarter financial decision-makers.
As early as a toddler, I have been talking about money with my children. According to research, money habits begin to form at the age of seven, so they must start when they are younger. But I have always doubted the effectiveness of financial literacy as a way to create better results. After interviewing Susan Beacham, the co-founder of Money Savvy Generation, I reconsidered this idea. Her mission is to help parents and their children become smarter in terms of money.
Beacham’s approach relies on reaching children when they are open to financial content, when they can “reach children emotionally and change their behavior.” Money Savvy works with 4-year-old children to solve basic problems in order to “free themselves from the influence of money management behavior before bad habits develop.” For this reason, the organization returned to the typical symbol of savings: the piggy bank. However, the Money Savvy Pig piggy bank is not a sponge that acts as a repository for all money, but has four rooms: savings, expenditures, donations and investments, “each of the four financial management options a child should learn from. When they were young.”
Around this time, you might be thinking, “Wait, it can’t be that easy, is it?” Of course not. Merely imparting information does not necessarily mean that adults will thrive financially. After all, I wrote a whole book, “The Stupid Things Smart People Do with Their Money: Thirteen Ways to Correct Financial Mistakes”, which tells why this is not the case. Those who criticize financial literacy as a panacea for financial distress rightly point out that even a solid literacy foundation may not help adults face major financial decisions in life. But does this mean that we should abandon this process together?
Beecham doesn’t think so. Neither does Laura Levine, the president and CEO of Jump$tart, a non-profit personal financial literacy alliance dedicated to improving youth financial literacy. Levin responded to critics who criticized financial literacy work. He wrote: “We know that better education alone cannot protect victims of financial fraud or discrimination, nor will it provide better services and opportunities, nor will it guarantee Workers have a living wage. However, we do believe that financial education is a solid foundation on which fairness, access, opportunity, services and consumer protection can-and will-be built on this foundation.”
To prove this point, Levine and Beacham cited independent research carried out by Eric A. Hagedorn and Mark C. Schug in the Journal of Economics Teaching to support the effectiveness of financial education. Although these efforts are relatively new, the paper cites two studies that show that “when teachers understand economics and use high-quality educational materials in the classroom, students can and do learn economics…” Children’s economic knowledge can be improved Through direct and purposeful guidance.” In other words, if we teach children basic economic and financial concepts, they will indeed learn.”
In addition to Money Savvy Generation, you can also check the Money as you Grow website of the Consumer Financial Protection Bureau to start a money conversation with the children in your life.
Jill Schlesinger, CFP, is a CBS News Business Analyst. She used to be an option trader and CIO of an investment consulting company. Comments and questions are welcome to [email protected] Check her website www.jillonmoney.com.