I have had the opportunity to be part of a number of conversations about personal finance recently. What I hear the most is parents and spouses want to have meaningful conversations about money, but they find it difficult to find the words or examples that will make the discussion valuable. The topic makes them uncomfortable.
Our society places a lot of judgment on money. This makes it hard to talk about money with friends and family, let alone teach it in schools. Our politics pit those who have money against those who don’t have money. Too often we default to inaccurate stereotypes such as “the rich are greedy” and “the poor are lazy.” These generalizations have nothing to do with reality, yet they cloud and complicate an already difficult discussion.
In addition to our judgments, we have a belief that we must be polite and not talk about the taboo topic of money. This means our young people don’t get the benefit of hearing important conversations. We miss key teachable moments.
To make matters worse, personal finance has become more complicated and more impersonal over the past few decades. At the same time, college debt has exploded and financial literacy has decreased.
As with many sensitive topics, if we aren’t talking to our own kids about money, we risk the chance they will learn from someone who may not have their best interest in mind (or who may take advantage of them). This doesn’t mean you need to know everything on the topic. You don’t have to have an advanced degree in literature to teach a child how to read and appreciate a good book. The same is true with finance. If you understand the income-minus-expenses formula and can write out a basic budget, you can give your child a strong financial foundation.
In this age of information and misinformation, it is more important than ever we teach the core concepts of money matters: income, expenses, budgets, savings, credit, debt and interest. If people have a solid understanding of these concepts, they have the foundation they need to ask questions and navigate the basics of financial management throughout life. Tax laws will change, technology will evolve, banks will merge, mortgage and insurance rules will adjust, but the core concepts of how we exchange money for things we value have remained largely the same throughout the ages. From the abacus to the latest app, the concepts are the same. And once you understand them, you can apply them in every stage of life. Income and expenses shift throughout life, but managing your money is the same at 20 as it is at 60.
To have the meaningful conversations we should be having across all generations, we need more focus on core concepts and less judgment. If we teach and talk about core financial concepts, we don’t have to ask taboo questions about income and spending. Instead, we can talk about having enough to meet our obligations while still saving for our future needs. In the end, the amount spent on an education, a car, or anything else really only matters relative to a person’s goals and ability to pay.
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Financial literacy needs to be more than a chapter in a high school class or a standard to meet in a lesson plan. It needs to be an ongoing conversation in our society and within our families. And most importantly, we need to take the judgment out of the conversations so our kids can focus on facts and how their financial decisions will affect their life.
• Joey Beech of Ankeny is the author of “A Girl’s Guide to Personal Finance.”