By April Sorrow
University of
Georgia

High school seniors routinely flunk national tests on money management. Despite required financial literacy classes in many state schools, the scores haven’t improved. But parents can help students handle money better.

“Young people can and do get by fine without being financially literate because their parents are making all the decisions. It’s when they strike out on their own and have to make their own decisions that the lack of financial literacy starts to take its toll,” said Michael Rupured, a financial expert with University of Georgia Cooperative Extension.

The JumpStart Coalition for Personal Financial Literacy recently surveyed U.S. high school students to find out what they know about money matters. Those surveyed had an average score of 48 percent, well below proficiency.

Kindergarten through 12th grade, Georgia schools are required to teach students financial literacy. Unless those lessons are re-enforced at home, they won’t make much difference. It’s up to parents to teach kids how to handle money, Rupured said.

“To become financially literate, an individual needs to receive ongoing education in a supportive environment over an extended period of time, either one-on-one or in very small groups,” he said. “The only institution that meets these criteria is the family.”

Talking to children about money is important, but it’s not as important as modeling good financial behavior. Children learn how to make financial decisions by watching their parents, he said.

“For better or worse, attitudes about money are shaped at very early ages,” he said. “The behavior the child sees has a greater influence than what the parents say. ‘Don’t do as I do, do as I say,’ doesn’t work.”

The ideal way to teach financial literacy is through an allowance.

“Start (giving an allowance) as young as possible. Make sure your child understands that they must save a portion for a rainy day, give a portion to those less fortunate and the rest is for current wants and needs,” he said. “Each year, increase the allowance and the responsibilities that go with it.”

Gradually shift responsibility for meeting wants and needs from you to your child with a goal of providing enough practice and experience for your child to successfully manage finances when they leave your home.

For example, he said, include school lunch money in the allowance as a teaching mechanism.

“If Susie doesn’t have lunch money — tough,” he said. “There are consequences for mismanaging your money. Kids that receive an allowance in this manner are far more likely to become savers as adults than kids who don’t receive an allowance.”

Financial literacy is a lifelong learning process. Each stage in life presents new challenges, decisions and learning opportunities. For example, buying a home for the first time, buying insurance, rolling over savings for retirement income or planning for the passage of an estate are all changing financial tasks.

“Teaching your children to be financially literate adults and modeling appropriate behaviors will likely pay off in other ways, too,” he said. “Families that pay bills on time and live within the family’s income tend to have more respect for one another, a greater sense of self-worth, and fewer financially-driven tensions.”

UGA Extension offers a teacher-training workshop to help high school teachers implement the financial literacy portions of the Georgia Performance Standards for economic understandings trainings. Visit the Web page www.fcs.uga.edu/ext/econ/youth.php for class offerings or call (800) ASK-UGA1 to find local Extension agents to help.

(April Sorrow is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)