Forget Money – Teach Kids About Credit and Soon

imagesI recently wrote some articles on Financial Literacy Month. In the last article I offered the opinion that we should make financial education mandatory in our high schools. Not just one class, but at least one class every year.

We teach geometry, physical education and sex education, why not financial education?

I remember one of my many trips to Walt Disney World with my kids when they were young. My youngest son was about 4 or 5 at the time. He was crazy about Buzz Lightyear, and he even had a Buzz wallet. We had given him some money to purchase a small souvenir. He was very conscientious about placing the money in his wallet. When it came time to pay, he put his wallet on the counter and pulled out the bill. The cashier smiled and told him the amount. He didn’t say a word, and barely could see over the counter. All he did was tap the bill with his index finger. I’ll never forget it.  

It’s fun and heart-warming to watch kids pay and get change at a store as you teach them about money. It’s always been an important subject that all parents need to focus on.

I recently read a disappointing fact that one in ten Americans, or about 30 million people are currently subject to debt collection activities. There is not a organized or mandatory system in our schools teaching basics about money, credit and investing.

The point I’d like to make is that financial websites, brochures, books are all great, and probably help some people. Poor credit habits are ballooning to crisis levels. We need to forget about teaching kids about money (the cash version) and start getting them educated about credit.

Credit cardsOur children need to learn how credit cards work, what car loans really cost and how over-spending on these things will hurt them from years to come. In addition, we can teach them that if they are responsible with credit and loans, then they may use them to their advantage.

I remember when I was a pretty young kid. We were at a toy store, and of course I saw something that I just couldn’t live without. My parents wanted to leave without buying the coveted item. When they tried to explain the reason, I cried out “Just write a check!” 

Some children get the idea that funds are unlimited through watching our use of checking accounts and credit cards. 

Discussing these concepts doesn’t get any easier as they get older either. I’m teaching my 21 year old about more advanced topics now like school loans and mortgages. I still think he believes I print my own money! I tell him all the time, “Son, I’m not the federal government, I don’t just print more.”

Like I have said before, we teach kids about all types of subjects in school. Why not credit and debt? They need to learn this stuff so that they can function in real life. Not everybody will use Geometry or European History. I’m not saying these subjects aren’t important, but I think everyone will use the information about credit and debt.

I’m sure getting this changed in our schools would take years. I even think that we should teach it in early childhood education. Get them to understand it before they have bad habits.

If we could start this education, we would raise generations of kids that would be credit smart. Smarter about credit cards, car loans and mortgages. Maybe then people wouldn’t overspend on stuff they don’t need. 

Knowledge is power. Stupid is expensive.