Money-smart kids: Good news from the financial literacy summit
BY JANET BODNAR Kiplinger News Service
Monday, May 14, 2012
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At the recently held sixth annual Financial Literacy and Education Summit, I announced the results of the 2012 Global Financial Literacy Barometer, which surveyed residents of 28 countries. The U.S. finished fourth, behind Brazil, Mexico and Australia. Obviously, the U.S. could have done better. But given the concern about financial capability, it was somewhat surprising that we fared as well as we did.
In the survey, which was commissioned by Visa, respondents were asked whether they discuss financial issues with their children, and whether they think teens and young adults in their country were adequately prepared to manage their money.
In more than half the countries, a majority of respondents thought that their kids didn’t understand money-management basics, such as budgeting, saving, managing debt and spending responsibly. In the U.S., a whopping 70.5 percent of those surveyed shared that sentiment, putting the U.S. at the bottom of the pack.
Parents in wealthier nations in general reported spending less time talking to their children about money. Plus, residents of many countries felt that schools should teach financial education at an earlier age than did Americans. The worldwide average was 11 years old, compared with about age 12 in the U.S. and age 9 in top-ranking Brazil.
The U.S. finished a surprisingly high sixth on a question about budgeting, with 54 percent of respondents saying that they follow a budget closely or most of the time. But that doesn’t necessarily translate into higher savings. The Chinese were the world’s best savers, with 3.9 months’ worth of expenses, on average, squirreled away. In the U.S., the figure was 2.9 months.
As sobering as the statistics may be, I’m always encouraged by how quickly kids can sharpen their financial skills when presented with a lesson that engages their interest. One of the events at the financial summit was a rousing game of Financial Football, a video game developed by Visa for students ages 11 and up (tulsaworld.com/moneyskills). Two teams of high school students gained yardage and scored points by correctly answering multiple-choice questions on a wide variety of financial topics. Example: “A check card is the same as: 1) a gas card; 2) a debit card; 3) a credit card; or 4) a membership card.”
And I hope the kids will remember the takeaway from Chicago Bears linebacker and guest “coach” Lance Briggs: “If you’re driving a bucket and you want a fancy car, keep the bucket until you can comfortably afford the car. If it’s worth having, it’s worth waiting for.”
(Janet Bodnar is editor of Kiplinger’s Personal Finance magazine and the author of Raising Money Smart Kids and Money Smart Women. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.)