We want to raise kids who can effectively manage their money, avoid debt, and build a solid financial future, but it seems we’re failing in raising money smart kids.
A nationwide survey of first-year college students, conducted by the firm Inceptia, found that 89 percent of respondents scored the equivalent of a “C” or below when it came to financial literacy.
And unfortunately, they’re developing a false sense of confidence. Two thirds of students in the Inceptia survey indicated they felt confident about their ability to manage their own finances.
Yet, despite the dismal results, there is good news. It seems there are things parents can do to help their kids become financial superstars. One of the most important is teaching children about the power of goals.
As Inceptia discovered, those college students who set clear financial goals were more likely to exhibit sound financial behaviors. For example, 44% of students with financial goals reported that they tracked their spending, compared to only 22% who had no financial goals.
Similarly, only 13% of students without goals had created a budget for their academic year, while 45% of students with financial goals had created a budget for the year.
But here’s the kicker, the numbers were even more impressive for those students who actually wrote down their financial goals. This supports previous studies proving written goals are more effective than non-written. It seems the act of actually writing out a goal increases the chances of it being fulfilled, and in the case of the Inceptia study, also increased positive financial behavior.
While 45% of the surveyed students with financial goals created a budget, 70% of those who actually had written goals created a budget.
What does this mean for raising money smart kids? Actively thinking of and writing out financial goals could positively influence your child’s money management behavior.
Have your child write down their money goals, whether it be saving for a new bike or video game. Then help them write a plan for accomplishing their financial goals. In the process you’ll be teaching them a crucial skill they’ll need to to become financial superstars.
BMWK, do you create financial goals for yourself? Have you discussed the importance of goal-setting with your kids?
Masu group says
Amazing article!
Bursa Satilik Daire says
Have your child write down their money goals, whether it be saving for a new bike or video game. Then help them write a plan for accomplishing their financial goals.