Last year saw a launch of several new web tools aimed at helping parents who want to teach their children the value of money. The goal of these programs is to supplant the traditional march to the bank after a birthday to deposit grandma’s gift checks and the accompanying “money doesn’t grow on trees” lecture from a kindly bank manager with fun and interactive lessons on the prudent way of saving and spending:
If recent research is any indication, many students are lacking in this area. For example, when it comes to understanding basic economic concepts, American high-school students received an average grade of 48% in a study from the Council for Economic Education, an advocacy group.
One website, launched in March of last year, Countmybeanz.com, allows children to bank virtual money called “Beanz,” which they earn by completing parent-designated tasks such as cleaning their room, taking out the trash, or doing the dishes. The “Beanz” are then deposited into the kids’ savings or checking accounts and once enough money is saved, the kids can either redeem their savings for a treat, or choose to donate the money to charity. Countmybeanz.com is aimed at children between the ages of five and thirteen.
Parents looking for solutions for older kids, might want to check out ThreeJars.com, which, in addition to providing similar functionality to Countmybeanz, is shortly planning to add an ability for parents to automatically approve spending up to a certain dollar level per month, thus entirely managing their kids’ allowances through the site.
These web-based tools join an after-school program sponsored by ING Direct designed to teach kids about money.
It is no secret that children who learn financial responsibility early will be better able to manage their finances later in life. As Freakonomics blogger Stephen J. Dubner lamented last year, several recent economic research papers have found an abysmally low level of financial literacy among American adults.
The majority of Americans do not plan for predictable events such as retirement or children’s college education. Most importantly, people do not make provisions for unexpected events and emergencies, leaving themselves and the economy exposed to shocks.
Dubner also highlighted another paper that showed Americans aren’t the only ones with poor money management skills.
[N]ew international research demonstrates that financial illiteracy is widespread when financial markets are well developed as in Germany, the Netherlands, Sweden, Japan, Italy, New Zealand, and the United States, or when they are changing rapidly as in Russia. Further, across these countries, we show that the older population believes itself well informed, even though it is actually less well informed than average.
But the good news is, according to Patricia Hubbell, parents who take a proactive role in teaching their kids financial responsibility, also get better at it themselves:
Making financial literacy a family affair also helps both adults and children improve their money-managing skills.