Why Aren’t We Showing Kids Money Habits?
Are we teaching kids about money habits that will serve them well? In this interesting blog post, Jenny Ford writes that we must put more emphasis on preparing our kids to manage money. Only a tiny proportion of people manage to live independently in retirement. The majority are financially dependent on the government, charity, or the kindness of friends and family.
Just 1% (one in a hundred) people were wealthy at age 65. Just one in a hundred Yale graduates - what would the statistic be for those who didn’t have a university education, I wonder?
Another 4% were financially independent. That is, they had passive income (income they didn’t have to work for) which was enough to comfortably cover their living expenses.
That accounts for 41% of the total sample.
The other 59% were in financial trouble. Some just had to keep working, because they couldn’t afford to stop. Others were dependent on government hand-outs or the charity of relatives.
More than half!
This is simply not good enough!
There is plenty of time in the average life to amass assets and become independent. There is enough knowledge in our knowledge bank as to how this can be achieved. We need to be showing kids money habits from a very early age, to ensure that these appalling statistics are not perpetuated in the next generation.
If we are showing kids money habits effectively, then kids will not get sucked into a whirlpool of debt by cell phones and credit cards. They won’t take out mortgages they can’t afford, or consume the hard-won equity in their homes by travelling excessively or buying depreciating assets like cars and boats.
When it comes to good money habits for kids, the buck stops with the parents. We can’t expect the schools to take up the slack here, because most teachers are little better off than their students in money management skills.
As Jenny observes, with life expectancies the way they are now, we are likely to live to see our kids reach retirement age. If they are struggling financially, because they never learned good money habits for kids when they were kids, we will actually have to face their accusing eyes and apologise for our failure as parents. Not that the apology will do anything to ease their financial woes at that late stage.
Parents need to be teaching kids about money habits alongside basic literacy and personal hygiene skills, as part of the basic life skills package that is required for survival in this day and age.