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Financial Education?

When do we teach our children about Money?

In today’s financial crises many are going through tough times while others are making themselves a fortune. If the way that education system teaches our young generation about economy and finance, what stopped them from seeing what was coming when they "knew" all about finance and economy?

What do today’s youth know about money and money management, apart from being the biggest consumers of all time?

Through my experience in dealing with youth I hardly see any young teenager who does truly cares what’s going on in today’s financial world. (not to mention the adults who do not care to watch the financial news on TV during the NEWS)

How can we bring to their awareness of fair trade and educate them how to be smart with their own economy?

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    Feb 6 2013: what would you teach? there is fundamental disagreement among "experts" how an economy works. ironically, those that failed to forecast the economic crisis of today, are the ones that the quickest to step up, and explain it. how much credibility they have?
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    Mar 6 2013: A los 6 años solo entiendes trabajar, ganar dinero y gastarlo.
    No entiendes financiacion

    Eso es para mas adulto
  • Mar 5 2013: I think we have to teach them not to buy something they can not afford.
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    Mar 4 2013: Hay que enseñarles economia no finanzas. Desde los 6 años.
    • Mar 4 2013: Qual es la diferencia?

      economia y finanza se van juntos, como las ojas y las ramas de un ardbol...

      qual niñ@ va a leer : The Wealth of Nation by Adam Smith ?

      como tu lo harias ?
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    Feb 9 2013: "How can we bring to their awareness of fair trade and educate them how to be smart with their own economy?"
    Simple. Have them read "The Creature From Jekyll Island" by Ed Griffin.
    • Feb 9 2013: Thanks you, sir.

      I didn't know that book either.. so I need to read first and explain and motivate them to read.
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    Feb 9 2013: Ed...I started teaching kids and teens about money in 2002 and realized quickly on that money simply wasn't relevant to most of them...they just didn't need to know about it and understand it...YET.

    I knew that I had to make it interesting and also fun and I also knew that it needed to simulate money in the real world so at least they would get some experiential practice with how it works when you approach adulthood.

    When I created The Money Game...a physically active financial education game where the kids literally work for paychecks, learn to pay their bills, learn to pay themselves first, learn to invest in assets that then pay them passive income and, oh yes, events happen!

    The game of money is quite simple but learning the rules and practicing the rules is anything but because, as I mentioned before, money is one of the most emotional substances on the planet.
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    Feb 7 2013: Pat, it is NOT that simple I'm sorry to say.

    I have been in the 'financial literacy' industry since 2002, created Camp Millionaire for kids and teens and a game called The Money Game. both highly effective and fun.

    Getting kids and teens (and the adults who tend them) to understand how money works is much bigger than basic economics. Why? Because as someone else pointed out, human beings are emotional and we buy things because of emotion...even the things we 'need' we buy because of some emotion.

    There are more reasons our country is financially illiterate than I could begin to cover and the rabbit hole is deeper than you'd ever imagine.

    1) Adults have a hard time teaching kids something they don't know or understand AND are uncomfortable with.
    2) Human beings make money mean WAY more than it really means. I teach that money is a tool to make our dreams come true but we make it mean something about who we are, how smart we are, how good we are, how successful we are, etc.
    3) Marketing skills have increased to the point where anything can be marketing to anyone, any age and it's not just the poor who are easily enticed...it's everyone. I have read that the most gullible are the people who think that they are NOT gullible!
    4) Financial education isn't required in most schools. When it IS taught, it's thrown into a grade or a semester and then you read articles that say Financial Education doesn't work. Of course it doesn't work! Either would math or English or science if it were taught for just one semester or one year.
    5) We have to stop lying to our kids, telling them that going to college and getting a job is the only way. Politicians scream that we need to create more jobs, but Hello, who do they think are going to create those jobs? Entrepreneurs! So why isn't THIS taught in every grade in America? Why does this seem so simple an answer but hardly ever done?
    6) We created a system that perpetuates the idea that we don't have to be responsible.

    Elisabeth
    • Feb 8 2013: You are truly a brilliant person and should have your own talk show or something. Where did you learn so much about teaching kids about money?
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      Feb 8 2013: I don't see that you have indicated anything that is not simple? YES it is that simple

      The problem is the memes that you run into. People some on this thread love to extol their knowledge on this subject but no doubt would flunk an exam on the subject. The first barrier to learning something is knowing that you don't know about something which is what you are running into. But in reality if a person has bought into the liberal Santa Barbara politics you would be better off teaching someone who can learn.

      Myself I was not formally educated in economics but I'm a logical person which definitely helps. A number of years ago I read a book called basic economics by Thomas Sowell and boom this book was life changing. I always understood that the free market was the way to go but after I read the book I knew why.

      The problem is that politicians prosper by spreading these memes. You asked why is it so hard well it is because politicians want it that way.

      It has been done in the past Paul Martin did this in Canada in the mid 90's. IMO we could do the same today and if we don't this country is toast.
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        Feb 9 2013: Pat...as much as I'd love to discuss memes and Santa Barbara politics, neither of them have any bearing on the topic. Just because I LIVE in SB doesn't mean anything about my politics.

        But what I know is financial literacy and you are completely wrong...it is NOT simple.
    • Feb 8 2013: Elisabeth,

      I agree with what you say... just like you I also mention that money isn't just the unite of exchange, but the most useful tool that ever been invented. the more tools you have the bigger your work will be.

      but let me go to my main question: How can we bring to their awareness of fair trade and educate them how to be smart with their own economy?

      I mean how we can make it easy to understand and apply. a 13 years old boy or a girl knows better how to play a computer game, than understanding where from and how is that game created.
      when you start to explain that this games is made to make money, it is not believable as the just downloaded for free or just a little amount of money (they didn't work for).

      I introduced them the Monopoly game (made easy) to understand that how they can buy assets and make money out of it (instead of buying liabilities and increasing their expenses) ... some thought it was interesting, (but not always)

      reading Financial Times (FT) or Forbes, is far from topic. I dont even seen any one read Financial news on the news papers, as they directly jump to Sports or Celebrities section. (I think there is a easy language used to be understood). while financial news got difficult language. in the end of the day, in today's world in every family it is the financial situation that matters (either you want to go on holidays, or pay your bills, kids' collage, no matter what). We all talk about money.

      I, myself, found my entrepreneurial skills since I was 11 or 12 years old, I was buying and selling.
      and I enjoyed more the interactions and communications with people than the money that was adding up.
      This was the first class education that money couldn't buy.
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    Feb 7 2013: The subject is specious made so by politicians.

    The best teacher is the culture, which has changed to one of entitlement.

    Beyond that simply teach basic economics. The Mises institute does a great job for younger people.

    I don't think it would be hard to teach children economics. The problem is in trying to people who have adopted the myths of the subject.
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      Feb 7 2013: I agree that it is much easier to teach a subject to those who are not hardened in their misconceptions.
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        Feb 7 2013: And there in lies the future collapse of America
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          Feb 7 2013: I just cannot "throw in the towel" yet. I DO find it a serious problem that adults are so often unable to distinguish quality information from junk. I actually don't think it is so much a shortage of training in critical thinking in school, though that is often blamed. Rather, I think very clever people involved in marketing ideas for their own advantage are simply able to overcome the level of critical thinking and understanding people have, often by pandering to people's vanity or wish to believe they have unique insight or information the 'authorities' don't want them to have..

          As in that TED talk to which you directed me (can't remember which at the moment), people tend not to be adequately innoculated to resist the memes that circulate. Whether it is some sort of pseudoeconomics or pseudoscience, the popularity of the false ideas and constructions among intelligent people is a real problem when it comes to getting people on board to work toward sensible solutions to problems.
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        Feb 7 2013: Good Post

        The MO of the average citizen is rather neurotic, most people will say I am pejorative but empirically speaking I don't think so just factual. Kriszian gets flack for the same. But yes it is a lack of knowledge in the area of logic.

        You point out marketing as "preying" on the poor innocents, marketing uses emotions, but that is not the problem, in fact marketing is a perquisite to creating want of which the current POTUS would not be POTUS without it, it sure ain't his qualifications.

        With that in mind you underestimate how much damage can be caused by the metastasizing of socialism in the culture.

        The above is another example of a meme.

        When using logic or the scientific method, you have to ask yourself one question and only one. What one thing could I change that would resolve the problem. The answer is ALWAYS simple.
        It is a matter of let people do what they do naturally and quit perverting them. How are they perverted? They are co opted. How are they co opted by the meme that the government will take care of them. This is the illusion that strips the individual of his integrity. People are enslaved through economics.

        How do fix this? You teach them economics. Sorry but it is JUST this simple.

        Look at the Jewish people they understand economics, it aint hard, and it is a part of their culture.
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          Feb 7 2013: My concern goes beyond economic misunderstandings. People come to believe all sorts of things that are not true and spread that bad information to others. If it doesn't hurt them or anyone else, that's fine. If it does, hurt them, their children, or others their decisions reach- that's where the problem arises to me.
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        Feb 7 2013: Yes but where are they more manifested than in the economy.

        It appears you don't appreciate how far the subject reaches.
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          Feb 7 2013: I have a pretty good idea of how far the subject reaches. No worries;)
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        Feb 8 2013: I misspoke I was referring to another thread. On the other hand Paul Krugman or Robert Reiche have a lot of "education" in economics as well. IMO running a business gives a person a different perspective on the realities of economics that neither of these individuals understand as if you took away government funding they would not survive.

        There has to a balance between the education and the practical too much of either does not work in the market place.
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          Feb 8 2013: True indeed. One of my mentors described something similar in a funny way. He used to say that you need to have one foot in the heavens and the other in the sewers of Oakland. I call the latter knowing how it works "on the ground."

          Education is only as effective as its content, how it is synthesized and considered critically by the individual, and how it is truly forged in practice.
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        Feb 8 2013: No wonder people tell me I smell, the lesson is not peculiar to Oakland.

        There are two parts to learning one is the receiving or copying of what is being said the other is weighing or evaluating. What is missing is the 2nd part. This is covered by Matt Ridley

        The reason for this is the infamous meme that Dennet talks about. The particular variant of this meme is that the citizen of the U.S. cannot have any prejudice what so ever, this is the only unforgivable sin, even to the point of having a view point. Not having a viewpoint makes it impossible to evaluate something.

        http://www.youtube.com/watch?v=eaE98w1KZ-c
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    Feb 7 2013: Sometimes, financial news seem to be self-fulfilling prophecies. I often feel that financial news are not the news about the reality, but the news about what's going on in the minds of people who generate them :-).

    I don't know about economic theory, but basic concepts should be taught, perhaps, as soon as kids can understand the underlying concepts - arithmetic, compound interest, income/expense, assets/liabilities, cash flow, net worth, etc.

    I'm not sure if the government education system is interested to do this. Children are encouraged to "get a job" more often than "to start a business". Education system seems to produce employees and consumers rather than employers and producers. I believe, that's a more fundamental problem with education and public mentality in general. People are taught to rely on the government rather than to take care of themselves.
  • Feb 6 2013: Consider the case of the U.S., children learn personal financial management mostly from their parents and other peers, who are on average awful examples of financial management. They learn how to have high consumption rates, little investments, and the government incentivizes this by saying hey, if you don't have enough money because you've been unwise, we'll give you some money from some of the people who know how to generate and keep money. (which is another topic but it's gross how the govt redistributes money from the people who have proven they can provide the most good per dollar).

    Also, consider your question from a stimulus-response point of view. Humans are very animal in certain kinds of learning and if we don't see immediate rewards for certain actions, or if certain actions hurt us in the now, we avoid them. Investing money takes it out of our pockets now, meaning we can't spend it. People have got to learn to feel better about having $20,000 dollars in their bank account in ten years, than having a new $10,000 car in the driveway today. But since they can't see that money in their future bank account, they do what makes them happy today.

    We need to simply help people feel the benefits of a wise stewardship over money (the hard part), and teach them the basics of how to be wise stewards (which is the easy part).
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    Feb 6 2013: This has been done in a variety of ineffective ways over time and probably works differently in different countries.

    Kids learn about coinage and money in math in grade school. Banks may come in to encourage and help kids open bank accounts, which always provided a miniscule rate of interest compared to what banks at the same time were offering adults.

    Independent of schools, some families give kids allowance and have their own ways of providing guidance about its use. Other families do not. Some families characterize it as compensation for doing chores. Some not.

    When I was young, high schools considered some students college bound and some likely not. The college bound kids took algebra, geometry, trigonometry, and analytic geometry. Maybe calculus. Those assumed not to be college bound took as their math classes called things like financial math or business math that were meant to provide a level of literacy suitable for daily money management. This was before the investment options were as vast and confusing as they are now.

    I know sometimes in lmiddle school kids are offered a supplementary math class which motivates kids to learn arithmetic by using basic financial applications.

    Economics per se is seldom taught in schools.

    I heard an author of a recent finance book interviewed about school financial education.

    She said students would no sooner remember this material than they continue to be able to fill out maps labeling capitals or countries in Europe, though those facts are drilled repeatedly in school. Early exposure to financial topics as they tend to be covered in school does not reliably innoculate kids for a lifetime against the slickly packaged bad advice they will recieve upon leaving school from parties who have an interest in exploiting their lack of understanding.

    I have wondered whether many people's critical thinking diminishes on leaving school. More likely, they cannot distinguish bad from good later input. Not just financial!