Kids Get Money-Smart

New Pro­grams Are Help­ing Par­ents Pre­pare Chil­dren for Re­spon­si­bil­ity

The Washington Post Sunday - - Business - By Mar­garet Webb Pressler

Tina Vance, a Chan­tilly stay-ath­ome mother of four, has been work­ing hard at giv­ing her fam­ily a fi­nan­cial ed­u­ca­tion. She makes the kids, ages 4 to 14, con­trib­ute 10 per­cent of their al­lowances to sav­ings and char­ity and she in­cludes them in dis­cus­sions of house­hold fi­nances. Vance heard noth­ing from her own par­ents about money or their fi­nan­cial sit­u­a­tion, but she laid it all out for her chil­dren. She used Mo­nop­oly money. “I put a pile on the ta­ble equal to one month of my hus­band’s salary. I also got out the cable bill, the phone bill, the Gi­ant re­ceipts, ev­ery­thing we had paid for that month,” she said. “We went around the ta­ble, and each kid took a turn pay­ing a bill. Af­ter all the bills were paid, there wasn’t much left.”

At a time when many Amer­i­cans are un­wise with their money — pil­ing up debt, over­spend­ing on credit cards, sav­ing too lit­tle and tak­ing on risky mort­gages — there is a grow­ing aware­ness that chil­dren need to be taught what their par­ents don’t know. If kids learn more about money, the think­ing goes, they won’t make the same mis­takes.

It’s not only par­ents who are wor­ried about the temp­ta­tions young peo­ple face — it’s also the fi­nan­cial in­sti­tu­tions that will need those chil­dren as cus­tomers in the fu­ture. Banks, in­vest­ment firms and credit unions are spend­ing an in­creas­ing amount of time and money on pro­grams and Web sites that teach kids the ABCs of money man­age­ment. Both A.G. Ed­wards and Wells Fargo have re­cently un­veiled on­line games that al­low kids to role play and learn about per­sonal fi­nance and bank­ing.

“They have a cra­dle-to-grave mar­ket­ing strat­egy,” said Eli Jones, a mar­ket­ing pro­fes­sor at the Univer­sity of Hous­ton and an in­dus­try con­sul­tant. “If they can cre­ate re­spon­si­ble spend­ing and in­vest­ing at an early age, then they’re build­ing a cus­tomer for life.”

Money-man­age­ment ed­u­ca­tion is also tak­ing off in the non­profit realm, as child-fo­cused or­ga­ni­za­tions in­creas­ingly stress the im­por­tance of fi­nan­cial re­spon­si­bil­ity. And then there is the grow­ing stream of money-wise DVDs, toys and books — some aimed at young­sters just out of di­a­pers.

“Most kids, all they know is spend­ing,” said Lori Mackey, founder of Pros­per­i­ty4Kids, which cre­ated and sells a sys­tem for par­ents to teach chil­dren about sav­ing and in­vest­ing. “We have to help them un­der­stand that when you in­vest your money, it will be there in the fu­ture for you, and it will grow into huge amounts of money. And when you tell them that, they get all ex­cited.”

Or­ga­nized In­struc­tion

Many par­ents know they need to do more to im­part fi­nan­cial wis­dom to their kids but want some help from out­side or­ga­ni­za­tions, such as banks or non­profit groups.

Is­lyn Nieves of Dum­fries has been try­ing to turn her fi­nan­cial mis­takes into an ad­van­tage for her 13-year-old son, Juan. When­ever he gets his al­lowance from his fa­ther, she ex­plains to him the folly of blow­ing it on comic books or Yu-GiOh! cards. But she wants to do more. Nieves, who is in the Army Re­serve, is think­ing of get­ting her son a debit card through USAA to track his al­lowance and give him a bet­ter un­der­stand­ing of what the card means.

“He thinks, ‘I have a credit card, so I have money,’ ” she said. “I’m try­ing to ex­plain to him that it’s not the same thing.”

Vance was thrilled when her old­est child, Mad­die, par­tic­i­pated in a pilot pro­gram at school that gave her class 25 hours of in­ten­sive per­sonal fi­nance and bud­get­ing in­struc­tion. Called Fi­nance Park, the pro­gram was cre­ated by Ju­nior Achieve­ment, a non­profit or­ga­ni­za­tion ded­i­cated to train­ing kids for pro­fes­sional suc­cess. In re­cent years, JA has been fo­cus­ing more on teach­ing kids how to be fi­nan­cial suc­cesses. Its Fi­nance Park model in­cludes hands-on learn­ing through role play­ing of real-life sce­nar­ios, along with class­room lessons.

There are six per­ma­nent Fi­nance Park fa­cil­i­ties na­tion­wide, ac­cord­ing to Ed­ward J. Gre­nier, chief ex­ec­u­tive of Ju­nior Achieve­ment of the Na­tional Cap­i­tal Area. Mad­die’s class did its in­struc­tion at a new mo­bile Fi­nance Park, built in two spe­cially out­fit­ted trail­ers (paid for by Cap­i­tal One) and de­signed to travel.

Each stu­dent was as­signed a sce­nario — such as be­ing an un­mar­ried, 32-year-old mother earn­ing $34,000 a year — and had to bud­get in­come to cover hous­ing, food, in­sur­ance, trans­porta­tion, child care and, if pos­si­ble, en­ter­tain­ment. Mad­die, like most of the stu­dents in the day-long ex­er­cise, left with a greater ap­pre­ci­a­tion of her par­ents — and a slight fear of grow­ing up.

“It was re­ally hard to pick and choose what you spend your money on,” she said. “Now I re­al­ize what they have to do in real life.”

That doesn’t al­ways make it eas­ier to re­sist the $50 jacket from the pop­u­lar teen store Hol­lis­ter, she said, but the JA pro­gram has made her think harder about such pur­chases, es­pe­cially when her mother ques­tions her spend­ing de­ci­sions. It takes vig­i­lance to re­in­force those lessons.

“I’ll def­i­nitely think about it — if I buy this, I won’t be able to buy that,” Mad­die said. “But some­times, I don’t know, some­thing comes over me and I just re­ally want to buy some­thing.”

A Way for Teens

The JA pilot pro­gram was tested on eighth-graders at Rocky Run Mid­dle School in Chan­tilly last fall in part be­cause of the in­ter­est of Jack Dale, su­per­in­ten­dent of Fair­fax County Pub­lic Schools. He has made it a pri­or­ity to get more fi­nan­cial ed­u­ca­tion into the county’s mid­dle schools.

“Our school board, this past spring, was wrestling with the very is­sue of what should we ex­pect of all our kids when they grad­u­ate,” Dale said. “At 40 or 50 dif­fer­ent pub­lic hear­ings, they re­peat­edly heard, ‘we need to en­sure that our kids have fi­nan­cial lit­er­acy and cit­i­zen­ship skills.’ ”

The JA ex­per­i­ment helped of­fi­cials think dif­fer­ently about how to approach fi­nan­cial ed­u­ca­tion. Fi­nan­cial lit­er­acy lessons are cur­rently embed­ded in cour­ses such as so­cial stud­ies and math. “What we re­al­ized is we’ll be more ef­fec­tive if we pull them out of those con­tent ar­eas and teach them in a more pro­ject­based approach,” he said.

The Fair­fax school sys­tem will roll out a pro­gram for teach­ing fi­nan­cial lit­er­acy to mid­dle-school­ers over the next two years, join­ing a grow­ing num­ber of other sys­tems.

Only nine states have per­sonal fi­nance in­struc­tion as a high-school grad­u­a­tion re­quire­ment, but last year, seven more in­tro­duced leg­is­la­tion to re­quire some kind of money man­age­ment in­struc­tion in pub­lic schools, ac­cord­ing to the Na­tional As­so­ci­a­tion of State Boards of Ed­u­ca­tion.

NASBE formed a com­mis­sion last year to as­sess the need for such ed­u­ca­tion in schools and con­cluded that fi­nan­cial lit­er­acy and in­vestor ed­u­ca­tion should be a “ba­sic fea­ture” of K-12 pro­grams.

“The ev­i­dence shows that youth fi­nan­cial ed­u­ca­tion can make a dif­fer­ence,” the com­mis­sion wrote. “In­di­vid­u­als grad­u­at­ing from high schools in states that man­date per­sonal fi­nance ed­u­ca­tion cour­ses have higher sav­ings rates and net worth as a per­cent­age of earn­ings than those who grad­u­ate from schools in states with­out such a man­date.”

Teach­able Mo­ments

It’s clear the need is there. The Jump­Start Coali­tion, a non­profit group that pro­motes fi­nan­cial lit­er­acy in stu­dents and is funded by a who’s-who list of fi­nan­cial ser­vices gi­ants, ad­min­is­ters a sur­vey of per­sonal fi­nance knowl­edge among high school­ers. In the 2005-06 aca­demic year, the av­er­age score was 52.4 per­cent, up marginally from the year be­fore but down from 57.3 per­cent 10 years ago.

Part of the prob­lem is that par­ents don’t know what to teach their kids and of­ten don’t want to talk about money be­cause they don’t think they’re good role mod­els.

The fi­nan­cial ser­vices in­dus­try sees par­ents’ de­sire to ed­u­cate their kids as a chance to ed­u­cate both gen­er­a­tions. “You can learn it, you can model be­hav­ior, you can talk about it, you can learn with your child,” said Loretta Abrams, vice pres­i­dent of con­sumer ad­vo­cacy for the fi­nan­cial ser­vices firm HSBC.

Some ex­perts ques­tion whether fi­nan­cial in­sti­tu­tions use youth ed­u­ca­tion as a pub­lic re­la­tions move, to pro­tect them­selves from crit­i­cism for en­cour­ag­ing kids to spend, es­pe­cially with credit cards. Visa, for ex­am­ple, has part­nered with Has­bro to in­tro­duce a new ver­sion of the Game of Life board game. It comes not with play money but with a Visa card for swip­ing.

“The les­son and the moral for par­ents to be con­cerned about is un­less th­ese skills are con­sis­tently re­in­forced with a pos­i­tive mes­sage, they’ll be lost,” said Robert D. Man­ning, a fi­nance pro­fes­sor at Rochester In­sti­tute of Tech­nol­ogy and au­thor of “Credit Card Na­tion.” Some of the ed­u­ca­tion ef­forts by banks are “vastly un­der-funded,” he said. “The banks know this fi­nan­cial ed­u­ca­tion stuff is go­ing to be back­ground noise when [kids grow up and] it comes time to party with your friends,” he said.

The mar­ket­ing of per­sonal fi­nance to kids is be­com­ing big busi­ness. Sam Renick was a fi­nan­cial con­sul­tant be­fore cre­at­ing a rab­bit char­ac­ter, Sammy the Saver, aimed at teach­ing el­e­men­tary-school kids about money. He does per­for­mances for huge au­di­ences and sells prod­ucts on his Web site, www. it­sa­

You can also buy your child a toy ATM to keep pre­cise track of al­lowance de­posits (and with­drawals), or maybe settle for one of any num­ber of piggy banks that have slots for sav­ing, spend­ing and giv­ing.

If your daugh­ter is into Amer­i­can Girl, she can read “A Smart Girl’s Guide to Money.” If you want to teach her about in­vest­ing, there’s the book by One­, a Web site that sells sin­gle shares of stock, called “Stock Mat­ters: An In­tro­duc­tion to Stock and Own­er­ship.”

Got tod­dlers? They can watch a new DVD aimed at 2- to 6-year-olds called “The Money Mam­mals: Sav­ing Money Is Fun.”

Teach­able mo­ments start early, said Dan Mica, pres­i­dent of the Credit Union Na­tional As­so­ci­a­tion. For the past year, the group has been pro­mot­ing a pro­gram called “Thrive by Five” aimed at teach­ing preschool­ers about spend­ing and sav­ing. “You’re be­hind the curve if you start try­ing to teach your kids about fi­nances when they’re teenagers or young adults,” he said. “You’ve got to start teach­ing an aw­ful lot about this when they’re younger.”

For any par­ent fac­ing the re­turn of a col­lege stu­dent who couldn’t make it in the real world, those are de­press­ing words. And not ev­ery­one agrees. “It’s never too late — I didn’t learn un­til I was in my 30s,” said Mackey of Pros­per­i­ty4Kids.

But she and oth­ers agree that it’s eas­ier to get younger kids to back off on spend­ing and learn to save. Mackey pushed her own kids, now 11 and 13, and once they saw their sav­ings grow, they were hooked. It’s been good not only for their fi­nan­cial fu­tures but also for their self es­teem be­cause they’re not com­par­ing them­selves with oth­ers based on who has which gad­get or ex­pen­sive out­fit.

“They’re not ob­sessed with money any­more,” she said. “They know how pow­er­ful it can be for them.”


Par­tic­i­pat­ing in Fi­nance Park, a fi­nan­cial ed­u­ca­tion pro­gram for chil­dren, Mad­die Vance holds up a card that lets her add to her bud­get for spend­ing on ba­sics such as util­i­ties and food.

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