By: Adam Lowenstein
July 28, 2012
A child's approach to money, and how to teach kids beyond that
My son, who turns 4 next month, has an enviable way with money.
First of all, it's simple. Every coin he finds is a penny, no matter its actual denomination. We tell him pennies are the only brown coins and that if the coin is silver, it's not a penny.
Lesson: Don't obsess over how much (or little) money you have.
Also, he's happy to share. Along with thinking everything is a penny, he doesn't quite grasp the actual value and impact of currency. So when, a nickel in his hand, he offers to treat my wife and me to dinner, we thank him but suggest he just toss that money into his piggy bank.
"We'll get it this time," we tell him.
Lesson: Sharing with others, no matter the scale, is the best way to spend money.
Nor is he anchored to a bulging wallet, like his father. Yes, he has one, a nifty plastic billfold in a camouflage pattern. And it even has money in it, as he pointed out recently when he spotted it on the kitchen counter, pulling out a dime ("A penny!" he said triumphantly.)
But he rarely uses it. Most of his money is kept in the ceramic piggy bank that was a gift from his first nanny.
Lesson: Save your money whenever possible. And thick wallets can be bad for your back.
Granted, these lessons are basic, but you'd be surprised at how many people far older than my son struggle to grasp them. The 2012 Financial Literacy Survey from the National Foundation for Credit Counseling found that more than 40 percent of adults would give themselves a grade of C, D or F on their knowledge of personal finance.
But one upside to a money-crazy society like ours is that there are always opportunities to learn about finances. And two financial planners I talked to said it is never too soon to start trying to impart some of that financial knowledge.
"I don't think you can start too early for very general concepts, like you can't buy the family dinner for a nickel," said Dan Moisand, a financial planner in Melbourne.
Mary Baldwin, also a Melbourne-based financial planner and, like Moisand, a columnist for FLORIDA TODAY Business, said it's not too soon to start teaching basic yet essential financial rules.
Moisand believes, in fact, that there would be benefits to making financial education a standalone component of primary education and not just something shoehorned in to home economics courses or offered in stock market simulations.
A course on personal finance issues, including mortgages, credit cards, bank accounts and other basics that, if mismanaged, can really cause damage, would be so valuable, he said.
"I think that's a place where they can abosrb some of the complications," he said.
But in the meantime, Moisand and Baldwin agreed that teaching can start at home.
Moisand has two children, ages 14 and 16, and he recently took out his credit card statement and went over what happens when a person uses a credit card: what the store gets out of it, fees, how the credit card companies make money, minimum payments and so forth.
Baldwin talks about teaching adolescents to relate the number of hours of work to the purchase price of an item. In other words, how many hours do you need to work at your $7 an hour job to pay for a new iPad?
"Most of all, they need to learn early in life NOT to spend more than they earn," she said in an email.