A few commenters on my blog have been impressed with my frugal mindset, especially since I’m 22 years old.
I’m flattered, but really, it’s because my parents have taught me about money.
Yesterday, I went to the library and checked out a stack of books. One of them is the popular “Total Money Makeover” by Dave Ramsey. I hadn’t heard of him before I read about him in the blogosphere.
I’m about halfway through the book, and I’ll post my general reactions to it later.
One thing that struck me is the ages of people mentioned in the book. While there’s a few people in their 20s, most seem to be in their mid-30s to mid-40s. They had huge credit card debt–some had $30,000, some had hundreds of thousands in debt if you factor in their cars and home.
Happily, they were able to dig themselves out.
I don’t want to have to dig myself out of a bottomless pit of debt. I want to prevent myself from getting there in the first place.
I’d rather be 35, have no credit card debt, no car payments, and own my home outright. Wouldn’t you, too?
Yet, it seems people in my age group are saddled with debt with no way out. There’s student loans, credit card debt, and little in assets. Many in their early 20s are getting their first “real” jobs. It takes some time to build wealth and shed the debt from the college years.
Still, I’m not satisfied with how personal finance is taught to high school and college students. A rigorous course in personal finance should be mandatory in the high school curriculum, AND in college settings. But, parents should be actively involved in teaching their children about money–whether the schools teach about it or not.
There are actually college students who don’t know how to balance a checkbook–or even write a check.
But, these same students have 3 credit cards and several thousands of dollars racked up on it. Hmm. Something’s not right.
When you’re a college freshman, during your first few weeks of school you’ll pass dozens of people on the sidewalk, trying to get you to sign up for a credit card. You’ll get a t-shirt or maybe a sandwich when you sign up.
If parents and educators don’t tell kids “Hey, I don’t want you to sign up for a credit card when you are 18. Here’s a few reasons…” then chances are, they won’t realize how bad it could be.
You know how you teach your child “If someone offers you a cigarette, you tell them no.” Right? And then, if they are ever offered a cigarette, they remember that their parents taught them how to react.
These credit card hounds are essentially the same thing as a “friend” offering a cigarette.
“Want a credit card? Easy money! Buy now, pay later!”
“Sure! Sign me up!” or “No thanks, I’m responsible with my money. Bye.” Which will your child say? Are you sure?
I’m not saying every 18-year-old will be irresponsible with money. But tell me, why does an 18-year-old student with no (or very little) income need a credit card? Just say no.
Parents absolutely have to teach their children simple finance and gradually build to more complex ideas. How will I know how to budget, if no one teaches me? Sure, I can figure it out for myself, but it really is important that parents teach their children well–especially before they move out of the house.
So, if you are a parent: Get to it! If you don’t have a great grasp of finance, it is your responsibility as a parent to learn, so that you can later teach. Learn together if you want. You don’t owe your children money, but you do owe them a good education in personal finance.