Before you know it, your young children will be off to college and encountering a number of financial firsts such as renting an apartment, applying for a credit card and financing a car. The earlier you teach your children about budgeting and money management, the more equipped they will be to handle their finances as young adults.
For Many Teens, Financial Independence is a Cause of Anxiety
Many teenagers feel uncertain about their financial security as adults, according to Junior Achievement’s 2013 Teens and Personal Finance Survey.
The percentage of teens that feel they will be financially able to support themselves between the ages of 18 and 24, for example, has dropped from 75 percent in 2011 to 59 percent in 2013. Teenagers believe they will live with their parents longer, in part because they are unsure about their ability to budget, use credit or invest money.
You can help ease your children’s anxiety by preparing them now, while they are living at home, to use credit wisely and make smart financial decisions down the road. And there are resources out there that can help you in your efforts.
Arm Them With Financial Knowledge to Ease Their Fears
In metro Atlanta, Equifax is among several major companies and foundations who have partnered with Junior Achievement (JA) of Georgia to enhance the financial literacy of middle school students through JA Finance Park®, an interactive venue scheduled to launch in Atlanta in September. Currently, JA Finance Park facilities exist in more than 20 cities across the country.
The program begins in the classroom with a four-week personal finance curriculum provided by JA. The program culminates with a visit to JA Finance Park, one of two interactive sites at Junior Achievement’s Chick-fil-A Foundation Discovery Center.
During their day at the Park, each student will assume a profile with a specific job, income, education and family scenario. With this persona, they will work through different types of financial decisions they will encounter later in life, including decisions related to housing, transportation, food, utilities, health care, investments, charity and banking.
By the end of the day, students will have experienced real-world situations—understanding what it’s like to create a budget and learning how credit fits into the mix. For example, if a student visits the car dealership at JA Finance Park, he or she might get a car loan with a high interest rate if the student’s fictitious profile has a lower credit score.
“It’s gratifying for us to contribute to such an innovative program and collaboration between JA of Georgia and the Atlanta business community,” said Trey Loughran, president of Equifax’s Personal Solutions unit.
“If we’re able to collectively engage the young people of Atlanta in learning financial and budgeting fundamentals through this program, we all will benefit across our community over the longer term.”
The Big Picture
Financial literacy is about more than simply knowing how to track your spending and budget your paycheck. Those are good starting points, but children need to understand the impact of the financial decisions they make early on.
If children enter young adulthood with no concept of how to responsibly manage their personal finances, they could end up in financial trouble that will haunt them for years to come. If, for example, an 18-year-old young adult runs up large credit card balances that end up in collections, he or she may be unable to qualify for a mortgage at age 30—all because of those early decisions.
By teaching your children how to be responsible with money and credit from a young age, you can help them avoid financial disasters—and safeguard your own financial well-being. If you have to help your child recover from his or her mistakes, it could end up costing you, too.
Ilyce Glink is the author of ten books, including the bestselling 100 Questions Every First-Time Home Buyer Should Ask. Her nationally syndicated column, “Real Estate Matters,” appears in more than 125 newspapers and Websites, and her online “Ask Ilyce” columns are read by hundreds of thousands of people every month. She is a top-rated radio host on WSB Radio in Atlanta, the Home Equity blogger at CBS MoneyWatch.com, host of the Internet program “Expert Real Estate Tips,” managing editor of the Equifax Personal Finance Blog, and publisher of ThinkGlink.com.