Editor's note: In the coming days, members of the Consumer Reports Money staff will be sharing family lessons about money, both positive and negative. You're welcome to share your experiences, as well. Here, the fifth in the series:
When my college-age son asked me a very basic question the other day about how to write a check, I recalled learning to how to handle my own bill-paying when I was living in my first apartment after graduating from college. And once again I was struck by the fact that so little attention seems to be focused in U.S. schools on teaching kids the basics of managing personal finances by the time they leave high school.
What I learned about managing money came primarily from my mother, a high school teacher who was supporting three children on her own after a divorce. She also taught night-school bookkeeping classes for adults a couple of nights a week to supplement her income, and in her practically non-existent spare time also managed to earn a master’s degree to further boost her salary and career prospects.
Obviously the value of hard work and budgeting were messages that came through loud and clear to us as children, but so did her belief that the only proper place for savings was a government-insured certificate of deposit. While that conservative saving and investment approach may seem wise today to anyone whose stock or mutual fund shares have been pummeled in the market over the past year, my own observations from reporting about personal finance for more than 20 years have taught me that keeping at least some portion of savings in well-chosen equities offers the best shot at returns that can beat inflation over the long run.
On that score, my son’s high school did at least provide some helpful education. During his senior year, he and other members of his class took a course in which they created and followed a model portfolio of stocks, many of which were companies whose products they were familiar with, such as Apple, Nike or Google. They learned the basics and did pretty well, at least on paper. I also encouraged him to open his own checking and savings accounts when he was 16, and so far at least, he’s managed to resist the deluge of credit card offers he receives, and even build up some savings.
Hopefully, one positive side effect of the current economic meltdown is that we’ll see both parents and schools put a lot more effort into ensuring that kids become savvy in all aspects of handling money, from budgeting to evaluating credit offers and developing an investing strategy. There’s already extracurricular help available on this score too. For instance, long-time financial literacy guru Joline Godfrey, author of Raising Financially Fit Kids, offers summer camps and other programs specifically designed for teens.
If you’ve found other helpful resources or tips for making your children financially savvy, feel free to post them below.–Andrea Rock, senior editor
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