Top Ten Mother’s Day Gift Ideas
America’s Financial Literacy Crisis—and How to Fix It
By Scott Gamm
Could your local high school use an expert speaker on finance? Could your clients’ college-bound kids use a lunch and learn on financial literacy?
Far too many Americans are in the dark when it comes to how best to manage their finances. In honor of National Financial Literacy Month in April, we asked two experts to weigh in on the financial literacy crisis in America.
Both agreed schools need to be doing more to teach kids about finance. “This country has a real lack of understanding of how important it is to get the financial education in as early as possible with our children and as much as possible,” said Carmen Rita Wong, a personal finance author.
Only 10% of states received an A grade when it comes to how best they teach personal finance in schools, according to a report from Champlain College, and 23.5% received an F grade. A-grade states required students to take a finance class in high school in order to graduate.
“It’s just not enough,” Wong said. “The rest of the country needs to understand that this is really vital—just as vital as all of the other classes kids take because this is actual utility.”
Tina Powell, CEO of SheCapital, an investment management platform, said schools are too focused on testing. “There’s a saying in schools that if they don’t test it, they don’t teach it,” Powell said. “While the emphasis right now is on SATs, ACTs, and getting into college, there’s only so much margin that a teacher has that he or she can actually integrate these lessons in the classroom and that’s why we’re not seeing it.”
Wong said parents need to step in and fill the gap that schools have created by not teaching personal finance. “[Parents and teachers] also need education,” she said. “Not all parents have the right advice, and teachers also need to be educated on how to teach this.
Wong said parents engaging in basic money conversations with their kids, such as discussing allowances or explaining credit-card statements, can have a significant impact. “Sit down and practically show them how this all works,” Wong said.
The No. 1 concept to teach kids is limits, Wong said.
“It’s discipline, but it’s also just understanding that if you have $1, this is what it can do,” she said. “It teaches how much you can do with what, and if you want to do more, you’re going to need to borrow more.”
Powell said the practice of delayed gratification is fundamental. “You have to make sure your wants and needs are within reach,” Powell said.
Meanwhile, Powell pointed to compound interest, or interest on interest, as another important concept for parents to teach kids. The powerful effects of compounding interest can be seen when one starts saving early and has decades of time on their side. “Let your money work for you,” Powell said.
Both Wong and Powell agreed that stock-market investing is a critical component of financial literacy and wealth creation.
Quick! Easy! Thoughtful! For a mother, sister, dog mom, aunt, grandma. Buy jars, filling the ingredients and printing out a note card.
Or as a DIY Mother’s Day family project from kids to Mom’s.
The result is a simple, cherished, momento.
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