If you or someone you know is in debt, has a foreclosed home, or is struggling to pay the bills due to unemployment, you may have wondered how life would be different had lessons in financial literacy been handed out instead of endless lines of credit.
In an attempt to prepare a new generation of consumers with healthy financial habits, many organizations, and now the financial powers that be at the White House, are developing financial literacy programs to teach youth the financial skills they need to avoid spending pitfalls. According to a recent article in Time magazine, President Obama and his financial advisers recently released the 20 simple “money milestones,” showing what students in different age groups will be expected to know about finances. The following is a summary of Obama’s milestones for financial literacy standards:
- Ages 3-5. Children should understand it takes money to buy things, money is earned by working, they might need to delay gratification, and the difference between wants and needs.
- Ages 6-10. Children learn they must make choices on how to spend their money, they should shop around for deals, the dangers of sharing too much information online, and the functionality of a bank account.
- Ages 11-13. Children will understand it is smart to save 10% of what they earn, sharing credit card or Social Security numbers online puts them at-risk for identity theft, the earlier they start saving the more they’ll have, and credit cards must be paid back in full each month to avoid interest rates.
- Ages 14-18. Teens will understand college is expensive and their choices should be limited to what they can realistically pay back with loans, scholarships, grants, and projected income, credit card use should be avoided if they cannot afford it in cash, take home pay is different than gross pay, and a safe investment is putting money in a Roth IRA.
- Ages 18 and up. Young adults will understand they should use credit cards only if they can pay the balance at the end of the month, they should never be without health insurance, they should diversify investments and pay attention to hidden costs.
“Kids who are raised with even cursory knowledge of things like interest expense and fees on financial products will, as adult consumers, know enough to investigate further when necessary. That’s a minimum goal of financial education — and it is the right approach,” writes Dan Kadlec in the article.
LifeBound’s financial literacy book for teens “Dollars & Sense: How to Be Smart About Money” aligns to standards set by the JumpStart Coalition and teaches young adults the basics they need to know about money. It also introduces readers to financial stories from real professionals, common financial foul-ups, worksheets, and end-of-chapter exercises. To find our more about Dollars & Sense and read a FREE sample chapter, please visit the LifeBound website.
“Money Milestones: What Kids Should Know About Money and When,” by Dan Kadlec. 9 January 2012. Time magazine. Accessed on 12 January 2012. http://moneyland.time.com/2012/01/09/money-milestones-what-kids-should-know-about-money-and-when/