A plan for building youths’ financial skills
03/22/2013 9:32 PM
05/16/2014 9:36 PM
Years ago, while in high school, I thought I had a keen mind for managing money.
After all, I knew how to write checks, and managed to stash a little cash in a savings account on occasion. Not to brag, but I was also a pretty shrewd Monopoly real estate mogul. And to look the part of a financial whiz kid, I kept a couple of my father’s striped ties in my closest.
Mind you, my 17-year-old mind didn’t know the difference between a stock and a bond, I couldn’t even begin to explain the wonders of compound interest and I had no idea what could happen if you overused a credit card. But hey, none of my high school friends knew much about money other than how to spend it.
That won’t cut it today for many teens and young adults, who generally have way more disposable income, not to mention exposure to financial products and services.
In this vein, April has again been designated Financial Literacy Month, and activities will be held by the truckload nationwide to highlight the need for youths (and adults) to master the financial ABCs.
Though balancing a checkbook and setting aside money for a rainy day are still important skills for any teen to master, I would broaden that list to include a few more essentials, including some of the soft skills on how to negotiate and deal with people.
As I see it, before leaving home for college or a job, your son or daughter should know how to:
• Manage cold hard cash from an allowance or a part-time job. This includes writing checks, balancing a checkbook — at least an electronic checkbook — and using a debit card.
• Read the fine print on a credit card application and understand how long it can take to pay off the debt. Credit card statements now do the math for you.
• Understand the basic abbreviations that accompany a stock on the financial pages or online. It’s a far more valuable skill than being able to read the abbreviations on the sports pages.
• Compare prices when shopping for everything from a cellphone to a frozen pizza. Along those lines, know all the costs beyond the sticker price that are associated with buying a car, including insurance, fuel and maintenance.
• Gather the pertinent insurance and driver information when involved in a traffic accident.
• Pick out the red flags that provide clues to whether an offer is too good to be true. Likewise, pay heed to protecting your identity from online thieves.
• Navigate sticky customer service situations, such as beefs about the cellphone or cable bill.
For young adults, I would add getting used to working through health care billing issues while remaining calm and cool.
This is just the right time — before your kids are out of the house — to check up on their money and financial skills. It’s an opportunity that may not come around again.