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News & Press: Financial Literacy News

Sam X Renick: Forbes Gets It Wrong

Friday, April 1, 2016   (0 Comments)
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LinkedIn.com 03/25/2016

 

Forbes gets it wrong in its article titled 3 Important Money Lessons Kids Under 5 Should Know.

But, first, let's start with what Forbes got right. And, they did get a big one right!

One, parents want to take active and conscious control of their kids money education early! 

This is HUGE! It is also smart and responsible parenting. Whether parents realize it or not they are giving kids cues on money all the time. And, others are doing the same, consciously! See New York Times article: How Advertising Targets Kids.

A 2013 University of Cambridge study alerted everyone adult money habits are set by the age of seven. The Cambridge findings are consistent with what others have discovered related to education - the early years are the most critical with respect to instilling habits and attitudes. Additionally, many believe it is easier and more effective to shape behaviors than to try and change and correct them later.

Two, the three lessons cited in the Forbes article you should teach kids early are important.

  1. You need to earn money 
  2. Learn how to budget and spend earnings 
  3. Understand the difference between small and big ticket items

So, what did Forbes get wrong? They excluded the SINGLE MOST IMPORTANT lesson parents want and should teach kids under 5 about money:

If I had to summarize the Forbes message, it is essentially, teach your kids to earn and track their spending. That may be okay for the other kids, but not your kids, especially if you want them to have a great future and be positioned to make their dreams come true. 

Make no mistake about it, teaching kids to get in the habit of saving money pays off for everyone! You want to emphasize it. You want to prioritize it. It helps the entire family. 

For kids, getting in the habit of saving money early helps:

  • build and develop a mindset that stresses preparation, self reliance, and asset building
  • associate money with something other than spending
  • instill discipline
  • teach goal setting and delayed gratification
  • build confidence and esteem
  • protect from poor spending choices
  • position them to address emergencies and opportunities as well as get what they want and need when they want and need it!

For parents, teaching kids to get in the habit of saving money early:

  • may help them improve their own financial behavior by serving as a reminder and positive pressure point to practice great money habits themselves
  • lays the foundation to reduce the “gimmes” and reduce family stress
  • lays the foundation for conversations on other great money habits like earning, smart spending, giving, investing, wants and needs, etc.
  • instills pride and confidence they are doing a good job parenting and positioning their children for a lifetime of financial strength and wellness.

About 40% of people are saving so little they will run out of money in retirement according to Employee Benefit Research Institute. ―Carrie Schwab-Pomerantz, President, Charles Schwab Foundation  

For engaging, effective, & field tested strategies to teach your kids early that saving is a great habit or to collaborate on a personal finance experience please contact us. To get you started, below, I have provided two versions of our signature song titled Get in the Habit. Both you and your children (or students) will absolutely love them. 

Have a Sammyriffic day!


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