It’s not easy to raise and educate a kid these days. The world is getting more complex, and we all have to get more sophisticated just to keep up. Unfortunately, I see a big deficit in one of the most important life skills — financial literacy.
Basic financial literacy isn’t rocket science. But too many people treat financial education like a boring or unneeded chore – something to be put off for as long as possible. We don’t teach finance in any systematic way in school, and most kids get virtually zero financial education at home.
The majority of these children probably have parents who never had any formal education in finance either. And so the cycle continues, and it leads to lives of less prosperity, less freedom, and greater stress. We can do better.
All kids should learn to really understand the value of money, starting from an early age. This has never been the easiest part of parenting, and in some ways, technology is making it even harder. Instead of buying things with cash, we’ve switched to credit cards. With digital commerce, like 1-click buying and in-app purchases, we can now buy virtually anything with almost no awareness of how much we’re spending. If it’s hard for adults to keep track, imagine the experience of a kid with no context or experience.
It’s also important that kids practice weighing short term vs long term gains. That’s at the root of much of finance, and it can get pretty concrete. Games as simple as choose a slice of pizza now or 2 slices in a few hours can start kids thinking about tradeoffs.
Everybody needs to learn to think about the future, pick their goals, and pursue them over time. I can’t think of very many things that are more crucial to a good education, and it’s never too early to start. So why don’t we cover this stuff in every school in America?
Part of the answer is that money makes people feel stressed out, so they just avoid the topic. That can apply as much to a teacher or school board member as it does to anybody else. Of course, avoidance doesn’t help. And teaching kids to feel anxiety about finance is a terrible lesson to give them at an early age.
I’ll be interested to see how a new wave of apps and other fintech products might help. A variety of companies are jumping into the gap, selling gamified services to help kids (and adults) learn to set and pursue goals and care for their financial health. Technology can be part of the solution, but there’s no substitute for deliberate education. If it were up to me, I’d teach finance in every middle school in America.