Financial Literacy Month is a Great Time to Talk to Our Kids about Money

By Sean C. Rush and Sandy Magyar, Chair, JAWM Board of Directors

April is Financial Literacy Month; there is no better time to talk to our kids about the importance of effectively managing their money, so they can avoid the financial pitfalls into which many adults have sadly fallen.

Amid reports of lagging new home sales, interest rate cuts intended to spur the economy, and Wall Street riding a rollercoaster of investor trepidation, it’s difficult to put numerous complex economic events in perspective when speaking to our children about the state of the economy. How do you explain a sub-prime mortgage to a ten-year-old in a comprehensible way?

While the complexity of recent economic events may be difficult for our kids to grasp—and for many adults too—the fact remains that parents must seize the opportunity to talk to their children about the importance of financial literacy. And, there is no time like the present for young people to learn how to effectively manage their money.

Research indicates that only 43 percent of parents have discussed the importance of prioritizing needs and wants with their kids, and a surprising 42 percent of parents have not taken any steps whatsoever to discuss financial basics with their children (Capital One’s 2006 Back to School Survey).

Many parents assume—incorrectly—that their kids learn money management skills as part of their school’s curriculum, when in fact, fewer than half of U.S. states require even a basic economics course, much less personal financial literacy education.

For the last two years, consumer spending has outpaced after-tax earnings, and we carry approximately $2.5 trillion in debt, excluding home mortgages. This is the financial legacy we are leaving for our children, tantamount to writing a bad check that they will have to cash. We can, and must, do better.

Fortunately, there are organizations who are answering the call to educate the next generation of consumers about how to effectively manage their money. Junior Achievement is one such organization, working closely with the business and education communities to provide in-school, after-school, and site-based programs which teach K-12 students age-appropriate, hands-on lessons about how to be financially literate.

Junior Achievement teaches students practical skills that position them for success, such as how to create and use a personal budget, how to calculate the cost of credit, and the importance of saving and investing for the future. And, our programs are often delivered by volunteers from the local business community, who can provide positive career role models for students.

We encourage the business community to support organizations such as Junior Achievement, which reaches nearly 11,000 students in western Massachusetts. Results indicate that Junior Achievement programs help students develop successful financial management habits. In addition, Junior Achievement programs help students become workforce-ready by teaching leadership, critical-thinking, and problem-solving skills.

Businesses benefit from supporting Junior Achievement by positively impacting the success of our young people and the communities in which they live and work. And, employees feel good about working for a company that encourages and supports community involvement.

The benefits of providing effective financial education to our children are clear—as are the benefits to business of getting involved and supporting Junior Achievement. We need to take decisive action today—it’s a sound investment in our children’s futures.

Sean C. Rush is president and chief executive officer of Junior Achievement, which provides financial literacy, work readiness, and entrepreneurship programs to four million U.S. students a year, and to another 4.3 million youth in 118 other countries.

Sandra Magyar is the Chair of the Junior Achievement Board of Directors and the Director of Member & Public Relations, MMWEC. For more information about Junior Achievement, visit www.jawm.org.