Today I discovered a pretty cool personal finance site called Money as You Grow. This is a website set up by the President’s Advisory Council on Financial Capability and they’re setting out to try to help us educate our kids on personal finance and improve financial literacy (okay not my kids. I don’t have any kids. But J Money does!). This website is striving to offer 20 essential lessons for us to teach children so they grow up understanding money, debt, and working hard for your money. They also highlight compound interest, so I guess you’re also teaching the kids how to make their money work hard for them.
In general I’m all for personal finance education and teaching the kids. In particular, I love that they actually are starting the age brackets at 3 years old. I mean, have you ever tried to teach a three year old about money? Or even a five year old? I have a 7 year old sister and a 11 year old brother and it hasn’t always been easy to impart these lessons upon them. They definitely understand that you have to WORK for money. Obviously they like to just ask but they get the concept behind it, that it’s a reward for something you’ve done well (or just done, in the case of cleaning the garage).
The toughest lesson of personal finance I’ve had to teach either of them has been saving their money. The Money as You Grow site includes the 10% rule (save 10 cents of every dollar) for kids but you know? Kids don’t get it! I swear, it’s because to them a year is such a long time that they just can’t fathom saving for twenty or fifty years. If the kid is ten then a year is literally 10% of their entire life! Trying to build perspective on savings for that length of time, let alone decades, is incredibly hard. I suppose if you’re going to do it, you’ve got to either start young OR build a sense of need for it. Like for college or for a car. I know that’s one thing my brother does well; he figures out what he wants, how much it is and then how much he has to save and for how long. This isn’t exactly a case of him wanting to save though, he just has expensive tastes.
In general, I love this site and I applaud the effort the government is giving here. In general, kids don’t learn enough about personal finance early enough and it can definitely hurt them later on in life. Besides, if you talk to your kids about this then maybe you won’t have to have a more awkward discussion later.