Day 30: Prepare to Become A Positive Financial Role Model

If you’re like most adults, you probably want your children, or any youngsters around you, to develop good financial habits. But if you’re like the typical American, you may also struggle when it comes to being a good financial role model for our youth. A study by Northwestern Mutual revealed that 71% of parents feel that children should begin learning about money no later than the 1st grade.

Yet, five in 10 parents say they do not set a good example when it comes to handling money, and that they are not capable of properly teaching their children to manage money. To boost your financial literacy, enroll in an adult education class on personal finances. To educate yourself about investing, join the National Association of Online Investors (www.naoi.org), which has great online study courses. For resources, fun games, tips and ideas for teaching youngsters about money, log onto www.nefe.org or call the National Endowment for Financial Education at 303-741-6333.

The Northwestern Mutual survey found that less than 40% of parents talked about credit cards, loans and debt, and their own family finances with their kids. Fewer than one in four parents (23%) talked to their children about how to invest.

When asked why each topic was not raised for family discussion, most responded, “Children have no business knowing this.” Others said they “didn’t think of it” or that they considered their children too young to broach these issues.

But researchers also suggest another theory. “It is almost certainly lack of confidence with their own financial management skills that keeps parents from discussing some of the more complex, and key, money issues with their children,” says Mark Schug, professor and Director of the University of Wisconsin-Milwaukee Center for Economic Education.

If you are a parent or educator who would like more information and free materials on personal finance education, check out www.themint.org. That web site, jointly run by Northwestern Mutual and the National Council on Economic Education (www.ncee.net), offers practical tips, lesson plans, newsletters and interactive challenges to help teach kids of all ages about money.

Most experts caution that you can’t rely on the school system to teach your kids about money and finance.
“The lack of financial literacy in this country is really a shame,” says Bob Barry, former chairman of the Financial Planning Association. “Unfortunately, most schools are doing a terrible job of teaching the youth the basics about finance and investing.”

Financial professionals nationwide echo Barry’s sentiments.

For example, experts at the Greenwood Village, Colorado-based National Endowment for Financial Education sometimes find it difficult to get school districts throughout the country to allow NEFE representatives to come into their schools and provide proper financial training and education. NEFE (www.NEFE.org) has a cadre of capable and energetic volunteers on hand, and it offers financial education free of charge. Still, the organization frequently hears from administrators “we already teach that.” A review of the existing curricula, though, most often reveals a shell of a program or very basic things, like how to open a bank account.

By contrast, NEFE teaches Americans – mainly high school students – practical money management skills, such as setting financial goals, developing a budget and understanding the pros and cons of using credit. The organization also introduces teens to more sophisticated subjects, including insurance, investments, taxes, and retirement planning. While NEFE offers a fine program, financial literacy isn’t just for the youth. Most adults sailed through high school and even college without knowing a stock from a bond. As a result, many of us could also benefit from getting a solid financial education.

If that describes you, consider turning to the Securities Industry Association, Wall Street’s trade group. The SIA has teamed up with the Stock Market Game Program ™ to introduce The SIA Investor Challenge. The Stock Market Game targets the youth, but the Challenge is a hybrid educational initiative geared toward the adult crowd. “Investors consistently want more knowledge, education and tools to help them learn about investing. And we’re giving them one,” says SIA spokesperson Margaret Draper.

The SIA Investor Challenge can be found at www.SIAInvestor.com. The game is interactive and gives you access to experts who walk you through the basics, like asset allocation, evaluating risk, and portfolio diversification.

Best of all, you get a hypothetical $100,000 and the right to “trade” any security listed on the NYSE or NASDAQ, so you practice investing before putting your own funds at risk. At the end of the Challenge, you total your gains (or losses). Hopefully, by the time you do actually trade with “real” money, any investing blunders you make will be few and far between. Also, with any luck at all, your kids will emulate your successes – and avoid your mistakes.

Next – Day 30: Prepare to Become A Positive Financial Role Model (Part 2)

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