As we wind down financial literacy month, I can’t help but think about the recent Marvel release of Avengers: Endgame. Why? First, I grew up a bit of a comics nerd and am now a stalwart believer that 90s X-Men are the best of all iterations of X-Men. Second, I’ve shared the experience of the bigger story arc across all of the movies with my kids, which has been a lot of fun.
The second point is what truly matters when it comes to financial literacy month. We make financial decisions all day every day, whether we spend time to think about that or not. Get up and go to work, where your pay and benefits come from. Buy a coffee on the way to work. Bring lunch or go out.
And at certain momentous occasions, we are definitely thinking about the financial impact of our decisions. Do I take a new job or promotion? Do I relocate for work or some other personal reason? How will I finance or refinance my next or current home? Will I do a 15-year or 30-year mortgage? Should I participate in my 401k at work? If so, how much? And do I do pre-tax or Roth? Should I choose an HMO/PPO insurance plan or a high deductible plan? What do I do if I lose a loved one? When can I afford to retire?
The concept of financial literacy is generally to increase your understanding of any and all financial concepts, basic to advanced. Back in 2003, Congress supported the idea of financial literacy for our young. That’s somewhat surprising as financial education is not part of typical grade school nor high school programs so the onus is on parents. The sooner the education occurs, the better off they’ll be.
Some kids get an early start with money in a allowance or a part time job, and many kids are faced with big questions when it comes time to apply to colleges, which are as expensive as they have ever been. In story telling terms, it’s as if someone is being thrown into the major battle scene without any understanding of who the characters are or what’s happening with the plot. That’s not a great experience. In fact, a common theme in the student loan narrative is that many borrowers feel duped and uninformed, which leads to resentment and other negative associations with money. That’s not a criticism of higher education, it’s a criticism of the lack of basic financial education.
And I was there, along with many other students. My own story is somewhat ironic when it comes to personal finance. I got my first job at the age of 15, but I never saved. I had some really cool guitars, but no real savings even though my dad stressed saving growing up. But we didn’t talk about money that much, maybe a few times. I think that’s how a lot of situations are, and it’s a little funny. At work, avoid politics and religion. At home and with friends, avoid money.
So the concept of financial literacy is something very important to me both personally and professionally. I’ve decided I would start teaching my kids early, first with basic budgeting and saving. My kids are 11 and 13 now, and I’ve recently started to explain stocks and bonds. Last week, I took some information home about an ETF that owns video game, e-sports, and tech companies. I shared a fairly brief summary of what it is and asked if he was interested in investing. The 13-year old replies back, “Let me look over this info, and I’ll get back to you.” I loved it.
That’s what I ask of everyone reading this. Start talking and start early. Find a way to connect money concepts to their interests and experiences. The sooner you start to talk about financial decisions, the sooner you can concretely form lessons about money. And in that sense you are taking control of the narrative and telling a meaningful story that will help them for the rest of their lives. If you find yourself unsure about your own literacy, then seek the help of a professional.