Is financial literacy stressed enough in school? Kids today have a good understanding of what the planet needs. They are exposed to a good curriculum. For example, they are well informed about the environmental challenges or the health benefits of good nutrition. However, I believe financial literacy is not given enough focus in the classroom. For recent university graduates, it is a financial challenge to make it in this current world. Often, they start their working life with a load of student debt. Real estate is unaffordable to the younger generation unless they get some financial help from parents. That is why it is important to teach them about personal finance so they can better cope with the financial challenges they will face throughout their working life. If schools are not teaching enough about financial literacy, the only place where kids will learn about personal finance is by observing how their parents manage money.
What to teach your kid? I remember, when I was a child, my dad would bring home his monthly pay in cash. And together with my mom, they would do the budget for the month by putting an allocated amount of cash in various envelopes, each one for a specific purpose. If the money ran out for that purpose, then that was it, my mom had to wait until next month's pay to make up for it. That was budgeting 101. My parents never took on any debt except for the home mortgage.
Teaching your children about budgeting is critical. Before you do, you need to be convinced that: (1) budgeting is a helpful tool, not a chore, (2) budgeting is a way to take control of money to meet goals and improve your financial situation, not limit you, (3) budgeting is about choices, not sacrifice. Career choices Encourage your child to understand that whatever they decide to do, their career choice needs to lead them to a profession that will allow them to earn a reasonable income. Respect their choice and at the same time, they own it to make enough money to make ends meet. Be a role model Are your personal finances where you would like to be? Are you doing the best you can to improve your financial situation? What could you have done differently? Children learn from what they observe. Your experience, good or bad, can be a useful lesson for them. We want our children to do better than us and avoid the mistakes that we may have done in the past. It is good to have those money discussions with your child once in a while. We want to teach them how to make money an ally that will help them through life. Let's help the next generation be financially smart and inject hope in them so that they can deal with any challenges that come their way. As always, if you have any questions, please let me know. I would be happy to help you get your financial house in order.