Yesterday, Paul Farrell proved that what “bleeds leads” with his story on financial literacy education. He writes that “…even the best-of-intention (financial literacy) programs will never (yes, never) work” because as he puts it “…the human brain (cannot) retrain itself to make rational decisions about investing, finance and budgeting.”

Well, Mr. Farrell is kinda right.  Retraining is a zero sum game in many instances.  Once someone has dug the hole, it’s hard to climb out and over.  (It’s not impossible, Mr. Farrell – that was unnecessarily dramatic, don’t you think?)

But it is true that many financial literacy efforts fail because we reach kids with financial education too darn late – after their bad financial behavior is set in stone.

Every parent knows that IF you teach your child from day “one” behavior that you want to see – like how to use their indoor voice, say please and thank you and to brush their teeth at night before bedtime – they will grow up to behave in the way you have taught them. Most of the time anyway.

But, if you wait until they are in high school to teach them life skills, they are no longer listening.  Then life skills like their money behavior, now firmly molded, need to be “retrained” – and that is much harder to do.

Teaching a child life skills when they are young is the one window of opportunity we have to shape a child’s mind and behavior – and for some reason, money is the one life skill we wait too long to teach.

Today, Arnie Duncan called for EARLY financial education.  (Click here to read the full article). Early as in kindergarten, when the kids are still listening to us and we have the opportunity to mold their behavior – not change – or “retrain”.

As far as Duncan is concerned, the earlier the lessons come the better:

“‘I always think you have to start young. So if this is just one course, half a semester [or] a semester senior year, [it’s] definitely late in the game,’ he said, suggesting that schools should begin incorporating basic financial instruction as early as kindergarten. He admitted, however, that the Department of Education has limited ability to implement such a move, given the broad authority that states and localities have over their own curricula.”

I don’t know if Duncan knows this is the right time to teach these skills because he has kids himself or because he has seen the data that proves early financial education makes a difference.  I just know he’s right because I have seen the data  – and teaching kids young about money works.

Bottom line – teach your kids about the choices they have for money, how to set goals for those choices, the difference between needs and wants and how to manage an allowance when they are young.  Everything can be done in an age-appropriate way and trust me, they will get it.  And if you do start young, your child will likely be a member of the Money Savvy Generation instead of a debtor that lives their life servicing that debt rather than living the American dream.

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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.


  1. Kate Donnelly December 7, 2011 at 4:26 pm Reply

    Yes, I agree that getting kids started early on financial education is the way to avoid years (potentially) of “retraining” in their young adult lives. I’m a parent of a toddler and constantly realizing how much more she’s absorbing than I could have ever imagined. The area of kids and money is also near and dear to me in my professional life.

    Every time I’m in the grocery store with my toddler daughter she wants to get an apple and eat it while we shop. One little step I took this week was to ask her to wait to take a bite until after we had paid for it. I decided to use cash so she could see the tangible (as opposed to electronic via debit card) exchange. She did wait and was fascinated as we stood in line, watched the man before us check out (who was also using cash which I appreciated for the lesson’s sake), and then bought her the apple with our cash. I’m hoping this simple step starts her understanding of how stores and exchanges of money for goods work … and praying it decreases the chances in futures years of her getting a case of the gimmees every time we go to the store.

    I feel lucky to be starting her financial education now and I think it will be fun!

  2. Maureen October 16, 2012 at 1:39 am Reply

    I agree that it truly helps instill an inner discipline and sense of responsibility about money if we teach children at the earliest age about financial literacy. I did that with my sons, and they are both very responsible with their money, word hard, save and invest. They spend according to their life values. My frustration is that I work with teen mothers who have come from family backgrounds where they did NOT learn life skills, especially financial literacy, money management, budgeting, etc. They lack discipline and follow through. They have either had everything given to them, or had nothing and therefore are compensating now by impulse buying whenever they have a few dollars in their pockets. Their “bad behavior is set in stone,” as your write. In fact most of them learned the worst financial habits from their parents and other care givers. I am trying to find more information about what you call “retraining” since I refuse to give up on these young women. Do you have any resources specifically for teaching good financial habits to young adults that have really bad financial habits and little to no self control? They are also very low income, given that they are teen parents.

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