Raising entrepreneurs: Financial literacy
If we want to set our children on a path toward being in control of their learning today and their adult lives in the future, we may as well start with money.
Financial aptitude is about managing money, but it’s also about learning how to set goals that reflect your values and priorities. Values and priorities come first, then goals, then the tough decisions and work to back them up.
Schools don’t teach finance. Every year, we graduate young adults who are financially illiterate. This should be a priority — what could be more basic for helping young people get their adult lives started off on the right foot? How is it that our kids graduate from high school and head to college without a clear understanding of how credit works? How is it that we have teenagers committing to school loans that will be dogging them for years (sometimes decades) without a clear understanding of either the loans (bankruptcy doesn’t erase school loans — they stay with you forever) or what they’re buying (witness all the 20-somethings who are in shock that they can’t find a job, or that their salaries are so low).
How do we teach this? One, transparency. We talk openly about budgets, investments, goals, values. Two, content. Along with the other real-life skills we have to pass on, we make sure they get the financial version of “the talk”. This is what happens when you charge a purchase to a credit card and don’t pay it off right away. This is how compound interest works. This is how a savings account works. This is how the stock market works.
The way we homeschool can affect how our children approach and manage their financial lives. Habits of mind acquired from project-based homeschooling connect directly to financial aptitude:
• the ability to make a plan and see it through,
• the ability to sacrifice in the short term for a long-term gain,
• researching and weighing various opinions,
• managing impulsivity,
and so on.
The most important thing a person needs is confidence — self-assurance that they can learn what they need to know and do the work necessary to achieve their goals. We need to make sure our children acquire that confidence — because it’s the key to everything else they’ll want to do in life — but their confidence must be authentic and based on real experiences. Many teenagers graduate from high school filled with false confidence and make some of their most important life decisions without a clear grasp of how the world works. We need to make sure our children do challenging, meaningful work and build up real thinking and learning skills.
Having a job can be very instructive for teens, but these lessons should — and can — start much earlier. Doing meaningful, long-term project work helps build a foundation of thinking and learning skills and real-life experience with goal-setting and problem-solving.
How important is it to you to teach financial literacy? Do you have a plan for how you’ll teach it?