Money should be earned, learned, and respected

Teaching children to save is a lesson that needs to start early. Yet when the subject is money, many parents and schools fall short in their instruction, financial experts say. They warn that without a respect for money and an understanding of credit, young people risk spending unwisely and going into debt.

Only about 10 percent of students learn about personal finance before they graduate, according to Dara Duguay, executive director of Jump$tart Coalition for Personal Financial Literacy in Washington. In a nationwide survey released last week, the coalition found that 12th-graders answered only 52 percent of questions correctly. That is down from 57 percent in 1997.

"Students failed dismally," Ms. Duguay says of the surveys, noting that the average score was F. High school business classes tend to serve students on the school-to-work track. "Ironically," Duguay explains, "the students who are going to college and getting credit-card applications in their book bags the first day are the ones who are not receiving personal-finance education."

Paul Richard, executive vice president of the National Center for Financial Education in San Diego, adds, "The biggest message parents give their children when they give them credit cards is: Spend." His organization is developing programs for elementary schools that focus on spending and saving. A video for preschoolers about learning to save features two piggy banks.

One of the biggest hurdles parents face, Mr. Richard finds, is helping children distinguish among needs, wants, and wishes. "The need might be a basic pair of shoes for gym. The want might be a pair of Nikes, and the wish might be Nikes with springs and lights and bells and whistles for $300."

He urges parents to give children allowances in denominations that encourage saving. "If the youngster gets $5, give them five singles. If they get a dollar, give them four quarters." Fred Gosman, author of "Spoiled Rotten," also emphasizes the importance of "educating young children about whose money is coming out of the money machine. It must look like free money."

That kind of early education can pay off later. The alternative? As Duguay warns, "Learning on their own from the school of hard knocks is very expensive tuition."

(c) Copyright 2000. The Christian Science Publishing Society