Age-Appropriate Money Lessons
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It seems twelfth-graders across the country are clueless when it comes to money. Every two years, the Jump$tart Coalition for Personal Financial Literacy, a nonprofit organization that seeks to improve the personal financial literacy of young adults, conducts random surveys of high school seniors to assess their comprehension of simple money concepts. Overall, they flunk answers to simple questions like the following:
If you had a savings account, which of the following would be correct concerning the interest that you would earn on this account?
a) Earnings from savings account interest may not be taxed.
b) Sales tax may be charged on the interest that you earn.
c) Income tax may be charged on the interest if your income is high enough.
d) You cannot earn interest until you pass your 18th birthday.
The correct answer is "c," but only about 24 percent of students got it right in the 2004 survey.
Why the abysmal results? One reason is that most schools don't incorporate personal finance lessons into their curriculum. The other is that parents aren't teaching the information, either.
The solution? Certainly, parents should encourage schools to adopt a comprehensive personal finance curriculum like the Financial Fitness for Life program created by the National Council on Economic Education. In addition, parents should teach their children age-appropriate money lessons at home.
The Lesson Plan
Even toddlers should be taught some money basics. Nan Mead, director of communications for the National Endowment for Financial Education, offers parents some guidelines for teaching money concepts to children in the booklet Simple Steps to Raising a Money-Smart Child. Following are some teaching ideas based on the recommendations in that booklet: