Our current economic condition has proven beyond a reasonable doubt that we, as a nation and as individuals, need financial education. It's an unfortunate truth that many students leave high school or college knowing the molecular weight of a carbon atom, but have no understanding of the difference between an asset and a liability. Which of these proves more useful in their day-to-day lives?
It's a no-brainer.
An important message
As a member of the President's Advisory Council on Financial Literacy, it is my goal and the goal of the Council to see that every student receives some form of financial education. We came closer to that goal in March with the introduction of H.R. 1325 by Congresswoman Sheila Jackson-Lee. This widely-supported bill would require every college and university receiving federal funds to provide a four-hour course on financial literacy. This course would be a requirement for every college student receiving a guaranteed student loan.
It's a big step in the right direction, but we need to work harder to ensure every student gets the financial education they need. Today's financial crisis might have been avoided if everyone had received basic financial education about good debt versus bad debt. However, changing our educational system takes time — time that we do not have. We all need to stand up and commit to educating our children, grandchildren and youth groups.
How can we teach a subject when so many of us are also in financial trouble? Great resources like Get Rich Slowly provide a wonderful place to begin the journey and learn more both for ourselves and our children. Take the time to review your finances with your CPA, investment advisor, or a financially savvy friend. Learn together as we all start to rebuild during this economic crisis.
In 1992, my son Phillip ran into financial trouble in college. Unbeknownst to me he had racked up $2500 of debt on a credit card that I didn't know he had. I was mortified. I thought I had educated him about money and staying out of debt. In fact, I had taught him the same lessons my father had taught me — except there were no credit cards when I went to college.
Even though I had told my son plenty of times how to be financially fit, I never showed him by teaching him about the perils of credit cards. He was with me when I used my credit cards during the “just charge it” times. But he was not with me when I paid off the bills each month, and he didn't realize that I made sure to pay them off each month to avoid interest charges.
It was this sobering experience that started me down the path to educate as many children and adults as I could on how to be financially smart. That same year I started working with our school system to try to include financial education in their programming. But it was far from easy. There were a number of road blocks in the way, and I started to look for other ways to provide financial education outside the traditional school curriculum. Fortunately, by 1994 my son Phil was firmly back on-track and out of debt.
Rich Dad Poor Dad
In 1997, I co-authored the book Rich Dad Poor Dad with Robert Kiyosaki. Together, we formed the Rich Dad Company and co-authored 14 other Rich Dad books that have been translated and sold around the globe. Rich Dad Poor Dad‘s success as a New York Times Bestseller for over six-and-a-half-years proves the tremendous need and importance of providing financial education.
In 2007, I decided to refocus my efforts back to where it all started — the passion I had when Phil got into credit card debt — financial education for our youth. I left the managerial board of the Rich Dad Company to pursue that goal.
Today, I have developed a combination of educational and experiential learning tools that help parents and interested adults teach their kids financial education — not by just telling them what to do, but by showing them in ways they can understand. In fact, they have the opportunity to earn while they learn, by becoming YOUTHpreneurs and owning their own companies. It is through setting goals and achieving those goals that we can turn the “entitlement” attitude back into the “empowerment” attitude! As these young people learn how to create their own wealth, you not only see their self esteem sky rocket but you also see their willingness to give back to those less fortunate.
A brighter financial future
We need to give our kids a chance to succeed or fail while they are still at home. Let them have some responsibility with a job. Encourage them to save some of their earnings, give some to charity, and then spend a little. They will learn much more through trial and error than through lectures and assignments. They will most definitely surprise you.
As you teach your children, you may find that you are learning something about money as well. The true bonus will be the memories created from the time you spend with your child and the knowledge that you are giving your child the gift of a lifetime — financial education!
With your help, we can all truly create a brighter financial future.
Author: Sharon Lechter
Sharon Lechter is the co-author of Rich Dad Poor Dad and a member of the President's Advisory Council on Financial Literacy. She is the CEO of Pay Your Family First and founder of YOUTHpreneur.