By Jean Chatzky
With reporting by Casandra Andrews
Parents and mentors can assist in closing the financial literacy gap
As a nation, we have work to do when it comes to teaching the next generation the ins and outs of personal finance. Only 25 states require high school students to take a financial education course before graduation, according to a 2022 survey by the Council for Economic Education. These are the future leaders and we’re doing them a disservice by not making financial literacy more of a priority in our education system.
We have to do better and start sooner
One way to improve is to require financial education classes earlier in the education process. Research shows that children begin developing life-long habits as early as age 7. Starting financial instruction before kids are in high school may be a good way to build a foundation of sound financial principles.
The other reality is that the heavy lifting shouldn’t fall solely on the shoulders of teachers. They are often faced with curriculum mandates, budget cuts, and shrinking schedules in core classes. Parents, caregivers, mentors, grandparents – anyone who has a positive influence over children and teens – can help them learn solid money lessons before they go off to college or get their first job. Here are some suggestions to help teens and college-age students become more financially savvy:
For High School Students
Parents can use the college application process as a teaching opportunity. When weighing college options, it’s important to be realistic and honest about how much you can afford to pay and how much they will need to cover. They need to understand it’s their responsibility to apply for grants and student loans to contribute to their education costs.
You can also show them how much their monthly loan payments will cost after graduation, and how many years it will take to pay them off. Then, encourage your child to apply to schools in a variety of price ranges — especially those that may offer scholarships and better financial aid packages, including those at public institutions. The sooner you have this conversation, the better off everyone will be.
Since college isn’t for everyone, it’s also a good idea for teenagers to learn about the options available at various trade schools, their costs, and future income potential following trade-based education.
For College-Age Students
If you haven’t had the talk yet, now is the time for your college student to understand why they need a budget and how to make it work for them. Carve out some time for a discussion and perhaps some show-and-tell on their anticipated first-semester expenses. One way to do it is to break down their budget into months and weeks, so they know exactly how much they can spend within a given period.
Here’s the tough part. You can’t run to their rescue if they run out of money before the end of the semester. They need to learn that money is a limited resource. If you send them more at the first sign of trouble, there’s a very high likelihood they will come back time and again and ask for more.