A recent report from the U.S. Department of Education shows that students haven’t become more financially savvy since the start of the “Great Recession” despite many families feeling the pinch, Fox Business reports. The report further finds that fewer than half of high school seniors around the country have a good understanding of basic economic concepts.
This is a problem that colleges aren’t solving, either. Financial illiteracy continues to haunt Americans past graduation well into adulthood.
According to Vince Shorb, the head of National Financial Educators Council, Americans are generally ignorant about money. Parents aren’t teaching their kids basic financial skills because there’s a lack of willingness to talk about finances with their kids.
Shorb sees signs of this everywhere – including in supermarkets where parents rarely use the opportunity to provide practical demonstrations on concepts like budget and savings.
“In the U.S. it has to do with parents not talking about money, not bringing them into activities that involve money. At grocery stores you see children begging and throwing tantrums over wanting something and parents just cave instead of making it a teachable moment.”
However, the problem of a lack of financial communication from parents has improved over the last six years. More students reported that not only were parents talking to them about money, they were exposed to more economic news from other sources on a day-to-day basis.
Still, many parents report that they feel uncomfortable talking with their children about matters of finance.
According to Robin Yang, creator of EnchantedCollar.com, money issues are often overlooked by parents because it’s an emotional issue that can be uncomfortable to talk about. “When parents are in financial troubles and aren’t good with managing their own finances, they are hesitant to talk about it with children so children aren’t taught how to manage money, and it becomes a vicious cycle.”
The school system and parents might be falling behind on their teach duties, but children are getting money lessons—just not from an ideal teacher: the media.
Although examples of conspicuous consumption in the media are legion, lessons on financial responsibility – a less glamorous proposition – are substantially rarer, Yang points out. Many kids exposed to shiny advertisements for toys and MTV shows like “Cribs” just don’t have a place where the messages like “earn it before you spend it” are effectively delivered.
Delivering those lessons isn’t complicated, Shorb explains. From giving children an allowance to helping them save towards a coveted toy or a game, such steps could be instrumental to making them more financially responsible adults.
Earning an allowance at a young age can also be instrumental to teach the value of money. “While families will differ on how much to give a child, the idea is about having money become real to them and not something that just shoots out of a machine,” says Jean Towell, assistant director of media and public relations at The Northwestern Mutual Wealth Management Company.
Yang suggests parents strive to make life events teachable moments. “If a kid wants a $50 toy, explain that a McDonald’s worker typically makes $10 an hour, which means five hours of work to afford the toy—is it still worth it?”