Teaching Money to Kids

Money and Kids
Money and Kids

Kids need to learn about money while they are young, so that they can develop good habits of spending, saving, and investing.  Although not as useful as the Dangerous Child curriculum discussed more below, here is an overview of a useful mainstream curriculum for kids from the Consumer Financial Protection Bureau of the US government:

Here are 10 highlights per educational level from the CFPB guidelines.

In grade school

In elementary school, kids should be learning about the financial world beyond their own piggy bank. Yes, the basics of saving, spending, investing and borrowing, but also more advanced concepts like compound interest, budgets and insurance against financial risk.

Saving and investing:

1. The difference between saving and investing.

2. The concept of compound interest.

Income:

3. Possible sources of income (not including mom and dad), like salaries, benefits and interest rates.

4. Why more education can lead to more income.

Spending:

5. You can’t buy everything you want. What goes into deciding to buy something?

6. How to count and use money.

7. What is a budget? And what goes into making one?

Borrowing and financial risk:

8. Borrowing allows you to buy things now and pay for them in the future.

9. Credit is when you use someone else’s money for a fee, and interest is the fee you pay to borrow money through credit.

10. Financial risk is an unavoidable part of life, and you can choose to protect yourself by avoiding risks or taking out insurance.

In middle school:

Now for the stock market. In middle school, kids should be learning that there’s a thing called Wall Street, and why it matters to them. Also, false advertising, and taxes.

Saving and investing:

1. How time, interest rates and inflation all affect the value of savings.

2. How to calculate interest, i.e. multiply the principal amount, the interest rate and the time of the loan or investment.

3. Financial assets you might want to invest in include stocks, bonds, mutual funds, real estate and commodities.

Spending:

4. When buying things, look for information beyond advertising claims to make a decision.

5. A good budget should account for expenses, income, savings and taxes.

Borrowing and financial risk:

6. The benefits to using credit to finance long-term purchases last a long time, but the benefits to using credit to make daily purchases are short-lived and don’t add up over time.

7. What is an interest rate on a loan, an annual percentage rate, and why do rates fluctuate based on changes in the market?

8. How to avoid getting charged interest on credit card purchases.

9. What is a credit score, and why does it matter?

10. What is an insurance premium, and why do they vary?

In high school:

Preparing for the huge financial decision of college is paramount in high school, but kids should also be learning the basics needed to navigate life as an adult after college. High schoolers should also be learning about the economy, financial regulatory agencies and policies, and should be taught the value of developing a personal financial plan.

Saving and investing:

1. The possible benefits — and risks — of starting a business of your own.

2. Going to college is an important financial decision. Consider tuition and fees, and the future economic opportunities of a degree.

3. How taxes affect income.

4. Some adult things you’ll soon need to worry about saving for: a car, higher education and retirement.

5. The factors that go into calculating an investment’s end value: investment amount, time, rate of return, and frequency of compounding.

6. What do the government agencies (like the SEC, FDIC and CFPB) do, and why does it matter for your finances?

Borrowing and financial risk:

7. The important factors in financial aid for college: grants vs. loans, amount of loans necessary, loan forgiveness and repayment schedules, and expected future income.

8. How to compare the cost of credit from different financial institutions, how to use credit wisely, and the risks of excessive debt — including declaring bankruptcy.

9. How to protect yourself from identity theft.

10. The different types of insurance, from health to auto to disability, and how things like deductibles and copayments work.
___ http://www.marketwatch.com/story/what-your-child-should-know-about-money-by-grade-school-middle-school-and-high-school-2015-10-22

51 pp PDF providing more detailed information on the CFPB youth financial curriculum

While the above curriculum falls far short of the Dangerous Child curriculum on money handling and entrepreneurship, it is far better than what most children and youth receive on their journey through the dumbed down educational system.

One of the biggest mistakes of the above curriculum is the high school curriculum — which is based upon the flawed assumption that all youth should go to college. For the majority who would do better following a shorter route to financial independence, the assumption of universal college attendance is a huge mistake and disservice to the students who are shortchanged and wastefully diverted away from a more productive future.

Dangerous Children are taught how to start businesses based upon entrepreneurial skills and personal competence. They will master at least 3 pathways to financial independence by their 18th birthdays. This is in addition to the mastering of the financial and legal skills necessary to buy and sell automobiles, homes, and other relatively high value items.

From before the Dangerous Child’s birth, parents focus on assisting the child to developing multiple crucial competencies. As the child develops, skill-building that contributes to personal independence is emphasised.

Emotional independence is likewise stressed, although it is well understood that self-esteem generally arises from personal competence — not from touchy-feely self-love affirmations or indoctrination. The social component of emotional independence is not neglected, but is rather developed to a fine art — in a style fitted to the individual child and youth.

Early training on money: earning, saving, spending, and simple investing, is carried out in the form of games and practise markets. Play-acting is one of the most utilised and useful forms of early childhood instruction along with experiential self-discovery.

As for the dumbed down government school system, we can only hope that most school districts will choose to eliminate a good deal of current dysfunctional indoctrination, and substitute useful training such as basic money skills in its place.

Bonus Information from “Survival Mom” on Self- Employed Kids:

My own daughter was just six when she began her own business, “Jog Your Memory”. Her motto? “I remember so you don’t have to!” I had told her she had a great memory since she was constantly reminding me of things I had forgotten! So, we printed out a few business cards, I gave her a Day-Timer I wasn’t using, and off she went to see if Grandma might need some help remembering her appointments! A couple of years later we created a business plan for a neighborhood garbage can retrieval service! Lesson learned? There are no limits to the ways a person can earn money.

Encourage your children to think of their own natural gifts and interests. Seek out family friends and relatives with skills that could be taught to a young apprentice. If your child is a computer nerd, help them discover a money-making niche in the vast world of technology. If your kid is an artistic dreamer, as mine is, take their creations and help them develop a business plan for earning money. Don’t overlook volunteerism as a way to learn skills and establish important contacts as a route to self-employment. Combining a young person’s natural skills with a marketable skill or product may open up a whole new way for them to earn money other than working for the nearest fast-food joint.

Self-employment breeds self-confidence, independence and important business and people skills. Take any skill, any interest, put your creativity to work and develop an idea for a new business!

__ http://thesurvivalmom.com/unemployed-kids-vs-self-employed-kids/

Teaching Kids About Money at Every Age

Teaching Kids Finance and Entrepreneurship

Teaching Kids Business

Finding mentors

Parents can educate themselves to provide a more individualised curriculum for their own children than most any school can provide — if they take a bit of time to look.

If a youth is financially independent in multiple ways — and is a skilled entrepreneur to boot — he will feel more in control of his life than most young people currently do.

There is much more than this to being a Dangerous Child, of course. But early financial independence is one of the cornerstones of the training.

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