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How to Teach Money Management to Kids

You can follow this teacher's example to help boost your child's financial IQ.

By Janet Bodnar

April 2, 2010

April is National Financial Literacy Month, and it’s easy

to find evidence that for many young people the F in
Financial is also a failing grade.

For instance, in Junior Achievement’s latest survey on

Teens and Personal Finance, nearly one-fourth of teens
said that they don’t budget their money (frankly, I’m
surprised the percentage isn’t higher). Among those
who fall into this group, 42% say that they aren’t
interested in money management, 37% say that they
don’t know how to manage their money, and 32% think
that budgeting is for adults so it doesn’t matter how they
spend their money.

That’s the bad news. But let me kick off the month with some words of encouragement. In my experience,
when a committed teacher lights a fire under motivated students, their financial IQs go through the roof.

Recently, I had the opportunity to chat with a group of eighth graders at the Washington Middle School
for Girls, in Washington, D.C., and with their math teacher, Kelly Lockard. The girls had just finished a
unit in class called the Real World Project, in which they randomly selected an education level -- high
school, college, PhD -- and then used Web resources to write a résumé and find a job.

After that, they were required to set up savings and checking accounts, budget for food and other
expenses, buy a house and apply for a mortgage, purchase and finance a car -- plus pay their weekly bills
by 8 a.m. each Wednesday. And Lockard was tougher than many banks: If the kids missed the deadline
by even one minute, she charged them a $35 late fee.

The students, who come from low-income backgrounds, were a high-energy bunch eager to chime in
about what they had learned. For instance, they were able to compare the pros and cons of a five-year car
loan (lower payments than a shorter-term loan, but more interest overall). And they engaged in a spirited
discussion of why pro basketball players make more money than teachers, therapists and even doctors.

“People who help others make less because it’s not commercialized,” theorized Carsan Johnson. Tayauna
Perry was sympathetic to basketball players because, she says, “We need entertainment.” The girls
figured that the high salaries paid to sports stars might have something to do with the value that people
place on various occupations. But they hadn’t quite grasped the connection between supply and demand
-- that big demand for a relatively small pool of top players also helps drive up salaries.

Tayauna admitted that having to budget her expenses in school hadn’t cured her of shopping at her
favorite mall stores -- Forever 21, Victoria’s Secret, Old Navy. But now she’s more cautious. “I catch
things on sale.” she says.

I think financial exercises such as Lockard’s are one of the best ways to get kids interested in managing
money and introducing them to real-life choices and responsibilities. And I got unsolicited support from
Carsan, who volunteered that she used to take her mother’s bills for granted. “I thought bills were $25 for
this, $300 for that. I had no idea that a mortgage could be $1,000 or more.” Now she knows.

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