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Developing Financial Sen$e
By Kate GogginI love the Bulgarian tradition for toddlers taking their first steps. The parents place objects at a distance and the child is encouraged to walk to his professional and financial destiny. If he chooses a book that may mean he'll show interest in studies; a lawyer's robe might signify a potential lawyer, and choosing a coin is a wealth indicator. In today's expensive world, we sure hope he chooses at least one coin and that his parents use it to start a savings fund.
A recent study done by the University of Texas Tech showed a direct link between financial education and future financial stability. That makes sense as our earliest monetary steps are guided or misguided by our parents and educators.
As a child growing up in the US, I was well aware of our family's financial fitness at all times. As the youngest of six children with two working parents, my father and I were responsible for the weekly task of grocery shopping. Every Saturday I saw my father sweat, as the total would sometimes top $200. He always kept a jar on his dresser to accumulate pocket change and I would watch as he carefully counted out coins to pay a portion of that big bill. Those valuable lessons about saving, budgeting and sacrificing stayed with me as I approached the adult world.
Nowadays, it's common for credit card companies to solicit teenagers as new customers. This can be a two-edged sword. One friend of mine owned her first credit card at the age of 14. While that seems too young, her mother gave her strict guidelines about when and where she could use it and how to pay it off each month. Instilling these values guaranteed my friend a stellar credit rating and history. Conversely, there are plenty of teenagers who absorb their parent's penchant for instant gratification. Ultimately, the legacy those parents pass on is debt management not asset inventory.
The Texas Tech researchers did another fascinating study about college students' behaviors and attitudes toward credit cards. The participating student's average age was 21, with 57 per cent female and 43 per cent male, and 86.85 per cent were Caucasian. The key findings of the study were: 71.5 per cent of the students owned credit cards, the average number of credit cards owned was three (with a range from one to 13), and the average balance on credit cards was over $1700. The bad news: less than 50 per cent of the student credit users paid credit card bills in full, 35.4 per cent of the student credit users said that they had reached their spending limit on one or more credit cards, and more than 30 per cent of the student credit users said that they used their credit cards to make impulsive purchases. The only shred of hope was that 93 per cent of the students agreed that it was too easy to overspend with a credit card and about 75 per cent of the students agreed that they feared the consequences of overspending with a credit card.
Some of us live in countries where credit cards can rarely be used. However, the elements remain the same no matter where you live. Whether you teach children to save stotinki or cents, your family's financial attitudes travel with you.
I know lots of parents who make it a point to deny their children candy, toys and non-essentials teaching the daily difference between need and want. I found a great website appropriately named ihatefinancialplanning. com. They seem to say it best, "your kids can't just hear about making choices. They have to feel the frustration of wanting more things than they have the means to buy, and they have to go through the process of making those choices for themselves."
Now that I've reached a certain financial maturity, I wish I could thank my father for passing on his financial sense. Perhaps the best way to do that is to put a jar on top of my son's dresser.
©2003 Kate Goggin
Kate Goggin is a Foreign Service spouse (FAS) and freelance writer. Currently living in Northern Virginia, she is available for short and long term writing assignments. Visit her website at http://www.kategoggin.com.
Additional Resources
http://www.kiplinger.com/columns/kids/ Kiplinger Financial Maga-zine website. Covers kids and taxes; a "Test Your Money Smarts" for teenagers; how to choose kid- friendly mutual funds and a toolbox to calculate "How Much Will it Cost To Raise a Child."
http://www.kidsmoney.org/ This website is offered in the following languages: French, Portugese, Spanish, Italian and German. They offer two helpful publications, Kids' Allowances: How Much, How Often & How Come, A Guide For Parents, and An Allowance Workbook. There is also an interesting "Kids Making Money Section" that offers a long list of money-making ideas for goods and services as well as advice about how to get started and how much to charge (everything from walking dogs to shoveling show - many transferable possibilities in Sofia and around the globe!).