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When it comes to financial literacy, today's graduates fail to make the grade. Asked about basic financial
concepts, high school seniors correctly answered only 48 percent of the questions, down from 52 percent in 2006,
according to the Jump$tart Coalition's recent survey on financial literacy. College students didn't fare much better, with
college seniors scoring a 65 on their survey, administered for the first time in 2008.
Why do so many miss the mark? It starts in the home.
Whether they lack confidence in their own money management skills
or assume that their children's schools will cover it, many parents
don't talk about money with their kids, and those who do often miss
the fundamentals.
"A lot of the basic stuff is overlooked by parents just because they assume that their kids know it, and they
don't," says Janet Bodnar, author of "Raising Money-Smart Kids."
"Why would they? Unless you tell them, there is no reason they would know that your family insurance bill is
going up by $1,000 a year just because they start to drive."
Before they leave the nest, boost your brood's financial literacy with these 10 money management lessons.
| Based on recent survey results, it appears that money remains a taboo topic in many households. Make it part
of your family's daily conversation. |
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| The financial facts of life |
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1. Balance a checkbook
Of the high school seniors surveyed, only 45 percent have a checking account, and one out of four have no bank accounts at all. Once they leave home and set up an account on their own, those without parental training often make costly mistakes.
Some 30 percent of college students admitted to bouncing a check.
As soon as teenagers start earning income from a job, it's time open a checking account, even if it's a joint
account with a parent, says consumer adviser Clark Howard, author of "Clark Smart Parents, Clark Smart Kids." Teach them how to write checks, use a register and reconcile their account with their bank statement.
Mistakes will happen, so look for kid-friendly options,
such as accounts that charge teens lower overdraft fees. And though
he refers to them as "piece-of-trash fake Visas" on his radio show,
debit cards are a good choice for teenagers, Howard concedes. Because
there's a finite amount of money they can tap, it's like training
wheels for credit cards.
2. Budget money
Over a third of the college students surveyed had paid a credit card bill late, and while some just forgot to pay it,
others put off writing a check because they ran out of money.
Start teaching your kids how to budget their money
as soon as they bring home their first paycheck. With no value judgments,
sit down with your children and ask them what they plan to do with
their money. Once you know their goals, whether it's buying a car
or an iPod, you can talk about what they need to do to get there.
"Priorities are good because you teach the concept
of finiteness," Howard says. "There's only so much money."
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