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Financial Literacy Month

April 30, 2021

April was Financial Literacy Month and something that we need to take on more seriously in teaching our youth.  I was excited to see my son had Financial Lit as an elective for his 3rd marking period.  His first assignment?  Build a budget for your dream vacation…. great.  Inherently, I understand this was an exercise in budgeting, but attaching it to the dream vacation left a bad taste in my mouth.  There are way too many people in this country with Dom Perignon taste but a Korbel budget. 

It’s boring but understanding how to build a budget properly to establish a consistent savings plan should be fundamental in what we teach our children.  If you are going to teach budgeting start with the basics…. making sure your paycheck can cover the rent or mortgage, the electric bill and your groceries.  Of course, that paycheck has this little thing called taxes that may surprise them when their $12 per hour job doesn’t actually pay them $12 per hour.  I might be dating myself but there is an episode of Friends where Rachel opens her first paycheck and says “Who’s FICA?  Why is he getting all my money?”

Some other things I’ve done with my son:

  1. He’s into sports cards, which at this point seems to have become as popular as cryptocurrency.  I gave him $100 to go to a card show so he could turn around and sell what he purchased on his Instagram page.  When he finished selling what he purchased, I told him to sit down with me and go over all his costs and income.  In reality, he had lost about $30 when he thought he was profitable.  He didn’t factor in shipping costs, tax, packing supplies, etc.…  So, I helped him build a spreadsheet to understand true costs.  It gave him his first taste of running a business.  That might turn out to be the best $30 loss I’ve ever incurred.  
  2. To fund this business, we had to open a custodial checking account. This is a great exercise for kids to start understanding money coming in and going out and any potential fees they may face in the banking system and how to avoid them.  The first thing he has been instantly focused on is keeping his balance over $100 so he doesn’t incur a low balance fee (By the way TD, stop being so cheap and come up with a better student checking program!)
  3. In addition to the checking account, you may be able to open a secured credit card for your child. These cards can help build the foundation of their credit score but are also in “pre-paid” form, so you won’t have a new PS5 showing up at your door compliments of said new card.

Overall, I’m excited that Financial Literacy is becoming more common in our school systems.  They have done some really good work in teaching good debt vs. bad, mortgages, student loan processes and the impact of interest.  All of those are excellent ways to get the conversation started with our kids.  If you have teenage kids like me, feel free to reach out and talk to me about some of the things you may be doing different than what I mentioned.  Also, if you have children that are older and entering the work force, I’m always happy to help them with their group benefit choices.  You can have them read about Sally Starter here.