Owen Voorhees, 11, and his baby brother Finn, 9, struck gold this year when they created an iPhone app for school children to test their math skills. The 99 cent app, called MathTime, sold more than a hundred copies in its first day, instantly transforming the brothers into successful pre-teen entrepreneurs.
Clever kids like these may be able to make money, but chances are even they don’t know how to keep it, or manage it for that matter. And what do you do if your kid isn’t exactly a little Einstein?
Every other year, the JumpStart Coalition, a group that hopes to improve financial literary among young Americans, surveys students to see how much basic personal finance knowledge they have. In 2008, high school seniors answered less than half the questions correctly. (See how many questions you get right here.)
Other studies have even found this knowledge gap extends beyond K-12 kids. The majority of students graduating from college have little or no grasp of basic money matters.
Given the tenuous state of the economy, we can’t afford to have a generation of Americans who don’t know how to balance their own accounts. Not to mention you probably don’t want your children complaining about their bad credit ratings for the rest of your life.
With that in mind, here are a few steps you can take:
1. Start By Figuring Out What They Don’t Know
In case you haven’t heard, young people don’t have to worry about credit problems at their age because they don’t have credit scores. At least that’s what most young people believe, according a list of the top ten money myths held by teens. Sit your child down and run through these topics and give them the JumpStart questionnaire above.
2. Get Them Interested at an Early Age
Most kids would rather be outside playing stickball than learning about derivatives, but a few good Web sites like Kids Bank and U.S. Mint are tailored to make money matters more interesting to young children. And for late bloomers graduating high school and college with no sense of the value of money, let them calculate how long the money they do have will last. That should scare them into at least buying a Finance for Dummies book.
3. Give Your Kid Real Financial Responsibilities
As your kids get older, give them an allowance and a bank account. If they can save a certain amount of money per month, then increase their allowance the next time around. Also, if your child is of age, consider giving them a credit card, or at least going over your own credit reports with them. Better they learn the ins and outs of buying on credit while under your roof than later at some college frat. For younger kids, consider something simpler and illustrative like this modified piggy bank.
4. Enroll Them in Business Boot Camp
We know what you’re thinking: What’s the point of helping my kid stop wasting my money if I have to spend more bucks on schooling? Well, there certainly are plenty of paid summer course options that cost a few hundred dollars. However, you can also enroll your kids in free courses in many cities like the one in Chicago offered through the Federal Reserve.
5. Force Them to Get A Job
If you want more immediate results, just make your kid work for their money. We know the job market isn’t great for young people these days, but it doesn’t have to be a traditional job. If your child is a computer wiz like the Voorhees brothers, why not take them around the neighborhood and see who needs some technical help?
—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.