It’s time to teach our children personal finance

Year after year, just as kids are either heading back to college or going for the first time, we can all count on seeing some of the same news items. In addition to back-to-school sales, separation anxiety for parents of college freshmen, and long registration lines, we see article after article about tuition costs, overspending, personal debt and credit cards.

Personal financial mismanagement places incredible stress on our families, our relationships, our work lives and our friendships. What are we doing to ourselves? More importantly, what are we doing to our children? As parents, we know that a solid understanding of personal finance creates a stable base for success in adult life. But are we preparing our children to lead financially sensible lives?

We’re certainly not stellar role models. The most recent bankruptcy numbers are alarming. Nationally, bankruptcies are at all-time high levels. In New Hampshire, it’s even worse. Personal bankruptcies in the Granite State increased 8.2 percent in 2004 — 4,357 personal bankruptcies in a state where we like to pride ourselves on Yankee thrift and financial common sense.

Research reveals that we do remarkably little to teach our children about personal finance. How does a credit card work? What’s the difference between a credit card and a debit card? How much comes out of a paycheck for taxes? How do you create and manage a personal budget so that you can save for the future? What’s a credit report? In so many different ways, we teach our children the importance of buying and having lots of stuff (and having it now!) but little else when it comes to dealing with what’s in your wallet.

There are two things we can do. First, talk to your kids openly about how money works. Talk to them about the reality of earning a living and paying for necessities. Explain how a credit card works and the importance of having a good credit record. Talk to them about establishing the habit of savings. I know it’s hard to talk about money, but the simple act of having some dinnertime conversations with your children on the topic will open up many doors for them and help them establish a sense of control over their lives.

Second, we need to include personal finance in our regular high school curriculum. The contemporary financial world has become increasingly complex. And the stark reality is that today’s teenagers, who collectively spent $175 billion in 2004, are unprepared to take advantage of the wealth of financial options and opportunities at their disposal. In fact, they are more likely than ever to be victimized by their own lack of knowledge. Every teen deserves to graduate with basic knowledge about personal finance and sensible approaches to money management.

We teach our children to stay away from drugs; we encourage them to get good grades. We pass along our values and beliefs. Let’s also teach our children basic financial survival skills: earning, spending, saving and investing.

Daniel Hebert is president of the New Hampshire JumpStart Coalition for Personal Financial Literacy, a statewide organization that seeks to improve the personal financial literacy of young people. For more information, visit

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