Atlanta, GA - Eighty-three percent of college students have at least one credit card with an average debt of over three thousand dollars.

“And I think this all stems from their earlier years in junior high and high school when mom and dad had a chance to sit down with their kids and talk to them point blank (and didn’t),” says Brandon Elliot, a financial education consultant for Young Biz Magazine. He says parents should be doing more to teach their kids to be financially independent before they leave the nest.

Fifteen-year-old Blake is the exception. “Since I was, like, when I could talk, my dad’s been talking to me about money,” he says. When Blake was ten, he invented the bike handler, a device to help parents teach their children how to ride a bike. “The parent just walks behind, and it can guide the balance and the speed.”

Starting his own business has taught Blake about priorities, and money. His mother, Teresa Henderson, says, “It seemed like at first he was a little confused because after he sold a bike handler, he thought he could buy a new pair of tennis shoes or whatever he wanted, but he figured out real quick that he needed to take the money and re-invest it to buy supplies to make more bike handlers.”

But a kid doesn’t have to start a business to learn that credit charges come due at the end of the month. Parents need to teach that, and the difference between a need and a want, along with how much it costs to run a house. “One day (my father) sat me down,” Blake says, “and he started going through the taxes and the food and everything, and I looked at him. It was the first time I ever really got the big picture.”

“Some parents might disagree with this,” Elliot says. “It may be too early to expose a kid to your expenses, but I think that pulling out one bill, and showing your child, would be a great thing to teach your son or daughter about investing and about saving for the future.”
Tips for Parents

* $179,000,000,000: how much money US teenagers spend annually.
* $1,585: average credit card debt for a college freshman.
* 17: percentage of students who pay off their credit card balances each month
* 63: percentage of students who say they get financial information from their parents.
* 3: the number of states that incorporate personal finance into curriculum standards for schools (Utah, Missouri, and Tennessee).
* 18: the number of states that require personal finance instruction be incorporated into other subject matter area.

The American Savings Education Council believes schools are an ‘obvious and natural avenue’ to reach young people with financial information, but the group also says the importance of parents ‘should not be overlooked or underestimated.’

How can parents help their children become ‘financially proficient’? In an address to the Federal Reserve Bank in Dallas, David W. Wilcox, US Treasury Assistant Secretary for Economic Policy, offered his own personal list of concepts parents can teach their children about personal finance:

* The concept of a budget constraint. Every graduating senior should understand that resources are finite, and accordingly that choices have to be made. A dollar spent on something today necessarily means either that a dollar less is available for spending on other items, or that a dollar less is available for saving for a better tomorrow.
* The concept of present value. Every graduating senior should understand that a dollar today is worth more than a dollar in the future. This is the fundamental reason why the time to get started on retirement saving is now, regardless of how old you are.
* The concept of risk. Every graduating senior should understand that the financial market is a very uncertain place. You could make more money than you expect, but you also might lose more than you expect. If something sounds too good to be true, it probably is.

What else? These suggested financial principles to impress upon children from the Kids’ Money Top Ten List:

* If you don’t have the cash to pay for it, you can’t afford it
* Begin a retirement and investment account now
* A sale in a store is not a sale if you can’t afford it
* Save at least 10% of each and every paycheck
* Always have and work toward a financial goal
* Money isn’t everything and greed is not good.

References

* Consumer Credit Counseling Service
* Financial Literacy and Education Commission
* The Department of the Treasury
* National Council on Economic Education
* Jump$tart Coalition for Personal Financial Literacy

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