In his recent his column for Marketwatch, Mark Hulbert suggests that no amount of financial education will ever keep people from doing the wrong thing when it comes to their money choices:

“In my experience, the biggest obstacle investors face is not cognitive but behavioral. Even when they have sufficient knowledge, they still do the wrong thing. No amount of education will overcome that.”

Well that’s depressing. And wrong. Financial literacy basics learned and mastered early on can help overcome behavioral missteps later in life.

For over 20 years we have been teaching kids how to get smart about money. We start in PreK. We shape behavior. That’s why it works.

And for the doubters in the group, we have a decade of published research that supports this success. Money Savvy Research

It’s like we have said from the get-go, teaching a child at a young age to brush their teeth, floss, wash their hands, say please and thank you and use their indoor voice – basic life skills – are all things that when taught young, can become behaviorally instinctual. And the more time a child has to practice these basics, the more likely they are to become a habit of the mind – enough of a habit to make a person stop, think and reflect before they act.

You “seed” the right behavior early with the hope that it will intervene in the adult decision-making process.

The federal government’s recent recommendation that financial literacy courses become “mandatory” for college students is a good start.  But to start that type of education so very late in the process severely dilutes its impact. Even so, it’s still so worthwhile.

At the college level, a curriculum that covers what to do with that HR package and the importance and impact of compound savings would be well worth the classroom time. Graduates would then understand how important it is to get cracking on that 401(k) option and match early.

Now, throw in a budgeting lesson, introduce them to and then remind them that credit is a convenience you pay off in full each month and you can call it a day.  You have armed those college students with at least some of the basic tools they need in their money toolbox to avoid missing the extraordinary opportunity of time being on their side – now. Less so later.

Maybe hearing from an actual college student (Allison Beacham, Miami of Ohio graduate) on whether or not a fin ed class would be beneficial is appropriate right about now:

“During freshman orientation, we shared our feelings about leaving home. Sure, we were nervous about that and it was worth discussing. But why not also take a moment to talk about the financial perils of bringing your debit card to the bars or incurring overdraft fees?  A less intimidating money class — a personal finance elective — for those of us not aspiring to be Wolves of Wall Street might have drawn interest. Or, here’s an idea — how about a required Money Edu class? We all had to take Alcohol Edu. Why not Money Edu?”

Full disclosure – this college grad is my daughter. Now 27. Robust 401(k) balance. No credit card debt – and her Fin Ed 101 came via us – her parents. But not all parents will stop and teach the basics. So why not use college as a safety net of sorts? What harm could that do?

We train and educate early to help them avoid the consequences later in life.

It’s so worth a try – and the best hope we have for the next generation.

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Written by Susan Beacham
Susan Beacham founded Money Savvy Generation in 1999 after almost two decades in private banking and investment management complemented by considerable time teaching at the elementary level.

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