WHO IS TEACHING JOHNNY AND SUSIE TO SPEND?

Take Charge America Says Children Can Learn Money Management Skills and Saving Habits As Soon As They Can Count

PHOENIX, Ariz. (TBD, 2004)...As children and young adults across the United States start school, their teachers are going to help them learn reading, writing, and arithmetic. They also will help them learn other subjects such as science, social studies, art, and more. But who’s teaching our children about money management skills? According to Mike Sullivan, director of education for Take Charge America, one of the oldest consumer credit counseling companies in the United States, this is a subject matter that, unfortunately, isn’t brought up as often as it should be in the schools or in the family household.

“I think many parents are under the impression that all the schools are teaching our children this information,” said Sullivan. “The truth is, with the recent No Child Left Behind legislation, the curriculum on money management is very limited in schools. The main responsibility of this learned activity lies primarily with the families.”

“It used to be that parents were uncomfortable talking about the birds and the bees to the children just because it is a personal and intimate subject,” said Sullivan. “Today, parents are finding the subjects of finances and credit almost as difficult to talk about.”

Sullivan added that many parents just don’t know how to share or are afraid to share with their children primarily because they never really learned about good money management skills themselves. Sullivan also said that the Baby Boomer generation’s busy schedules and longer working hours are causing the parents to forgo this responsibility and leave the spending decisions in their children’s own hands. This is a surprising, but also scary, thought.

According to Teenage Research International, teenage spending has jumped from $122 billion in the late 1990s to more than $172 billion in 2002. Advertisers and marketers also have been focusing on the spending habits of the massive “tween” group — children ages 8 to 12 — who are spending millions of dollars on everything from candy to CDs and clothes.

“What we are creating in this country is a generation that will not fully understand the value of the dollar or even the concept of saving,” said Sullivan. He said we are already seeing the effects of poor money management skills with the overwhelming consumer debt here in the United States, which is right now well over $2 trillion. A good portion of this is a result of credit card abuse. “Imagine when these teenagers become contributing members of society in the next 5 to 7 years,” Sullivan said. “We need to be actively involved now in how our children and young adults spend and save their money.”

“Many parents assume it isn’t necessary for their children to learn about money management skills and credit cards until they are in high school or college,” he said. “We automatically assume our children understand all of this, but they don’t. Also, by the time children reach high school or college age, they have already established their spending habits. In most cases, it is not too late — just harder to make them change.”

Sullivan said his company, which currently receives thousands of calls every year from financially-stressed individuals, receives a very steady flow of adult callers soon after their college years (mid-twenties in age — usually ages 24-25) — asking for financial assistance. He says many of these situations could easily be avoided if these individuals had acquired some money management skills in their earlier years. “Our research shows that children can easily understand and learn money management skills as early as they can learn to count,” Sullivan said. “For this reason, we need to start teaching these concepts to children at earlier ages.”

This might explain why Take Charge America started a pilot program last fall (2003) teaching money management skills to students in grades 1 through 6 at Desert Winds Elementary School in Phoenix, Arizona. The programs, which Take Charge America created, focus on better understanding the value of money, check books, credit cards, and savings. Sullivan said he would like to see more schools expand programs like this across the country. He also added that children in grades 1 through 6 are great ages to introduce and reinforce concepts, because they are still very excited about learning. Sullivan said that teaching money management skills and saving habits can be started with children anytime. It only takes some time and patience. Here are some tips that Sullivan shared on what parents and families can do:

All ages

• Parents need to set a good example first for their kids if they expect them to learn about the importance of money management.
• Let children make mistakes and learn from them, while they’re still young.
• Involve your children in the budgeting process — whether it’s for a one-item purchase or a month- or year-long activity.
• Parents should recommend some type of regular savings program — whether it’s in a bank or with a piggy bank.
• Using fake or play money, parents should play grocery store or bank with their children getting them used to value with money and things.
• Parents can help their youngsters to separate coins into piles by color and size and discuss their value. This is a good way to also practice counting.

Elementary and Middle School Age

• Start introducing real money to them — explain the different bill and coin values (NOTE: Schools do cover this information in their curriculum, but it is good to reiterate this with your children)
• Parents should let their children assist and help write out checks for some of the family’s bills. This lets them see how much payments can be for the house, car, utilities, and even credit cards.
• Parents and their children should work together to create a budgeted grocery list.
• At the supermarket, parents should have their children gather the items on the list, and comment on their savings. Have the children cut coupons out and use during these visits — emphasizing the additional savings by using them.
• Parents can provide a monthly allowance for their children in order for them to learn the value of a dollar. Parents and their children should then calculate the total amount of allowance they will receive over the period of one-year to show that with the right planning and saving, over time, he or she can actually afford the new outfit or toy that is wanted.
• Parents and their children should go to the bank and set up a savings account. Many banks will have little or no fees for children’s accounts.
• Parents should explain the difference between a credit card and a debit card, and how they work and how they compare with each other. This might be a good time to explain the purpose of an ATM machine and its relationship with a bank too.
• Parents should have their children keep a running list of each purchase they make and tabulate the total at the end of the month.
• Parents should again emphasize the concept of saving, and its value.

Teenagers

• Have children participate in a summer or part-time job, as long as it doesn’t interfere with their studies.
• Teach teenagers how to write checks and balance a checkbook.
• Parents should assist teenagers with the purchase of a major item, such as a bike or car.
• Parents should sit down with their teenagers and explain the possible consequences of using a credit card, and possible long-term effects.
• Parents also can involve their teenagers in long-term investments to teach them about the stock market.

About Take Charge America
Founded in 1987, Take Charge America, Inc. (TCA) is a non-profit 501(c)(3) charitable organization headquartered in Phoenix, AZ. TCA is committed to helping consumers gain control of their finances and offers a variety of services including education, budget and financial counseling, and when necessary, debt management.

TCA also serves as an effective resource for the business community. We help financially distressed consumers re-organize their finances and return hundreds of millions of dollars annually to financial institutions, professional service providers, and businesses of all sizes and descriptions that may otherwise have been lost to the economy in bankruptcy. TCA’s diversified programs are utilized by tens of thousands of families and single men and women throughout the United States each year.