Learning the Hard Way

In most cases, no one has taken the time to teach kids about personal finance and money management. The first conversation about money often happens after money management becomes a problem.  Unfortunately, the money lessons learned are too late and the ramifications are too great for many who go down this money management path. So, kids learn about money the hard way, just like the adults before them.

Lifetime of Struggles

For example, those children that do not learn about personal finance and how to manage money when they’re young can face a lifetime of struggle. Some people in this situation live from paycheck to paycheck and get further behind every week. In some cases, trying to stay “above water” before drowning from too much debt.  In the worst case scenario, even being forced to declare personal bankruptcy.

Lost Opportunities

Kids that grow up with weak money management skills can also lose out on financial opportunities along the way. For example, saving enough money to purchase a car outright so that a loan with interest doesn’t have to be used to buy the car. Or saving enough money to invest in the stock market so that the value of a diversified financial portfolio can appreciate over time. Using investments to build wealth can help a couple attain financial security.  If financial opportunities are not pursued, then quality of life may suffer and retirement may be delayed. 

Failed Relationships

Money is also one of the main causes of relationship issues and break ups. The weight of the financial burdens can be so great that it causes the relationship to become strained. Yet most parents want their children to grow up to be happy and successful in a loving, long-term relationship. If we don’t teach children how to manage money, we may be setting kids up for failure in their adult relationships right from the start.

Great American Recession

And with the most recent financial crisis, kids (and adults) can’t afford to be clueless about money management any longer. The Great American Recession has taught us a lot about how things can go wrong very quickly and for a long period of time. Lessons like making sure there is enough money for emergencies (Ex. Losing a job), saving for short-term (Ex. Car) and long-term goals (Ex. College) to minimize borrowing, and so on. Let’s not let this financial crisis go to waste!

Avoid the Same Mistakes

Caring adults should want to make sure that their loved ones don’t make some of the same money management mistakes that they made, when they could be avoided. And the way to avoid these mistakes is to teach kids about money management when they’re young so they can grow up to become financially literate adults prior to becoming independent.

Call to Action

Adults can’t afford to pass along financial ignorance any longer. The time has come to take a stand and help our loved ones become financially literate members of society so money lessons no longer need to be learned the hard way.

Your Feedback?

Do you feel as strongly about this topic as we do? If so, then leave a reply to this post below.

References

1. Clark Smart Parents, Clark Smart Kids (Howard, 2005)

2. Kids and Money (Searls, 1996)

3. Money for Teens (Shelly, 2001)

4. Money Doesn’t Grow on Trees (Godfrey, 2006)

5. Raising Money Smart Kids (Bodnar, 2005)