Financial Education Beyond a Piggy Bank

Has our financial education stopped after the piggy bank years or did we even have one when we were growing up?

This question reminds and brings me back to the days when I was working part-time as a financial planner for middle income families. The typical household will have:

– 2 nice vehicles park outside or in the garage
– 1 big screen TV
– 1 set of beautiful couches set in front of the big screen TV

As we go through the financial analysis, most are in great financial stress; credit card debt, type of mortgages that no ordinary person understands, no life insurance, no savings set aside for children’s education let alone emergency funds. Emergency funds come in the form of a plastic, called credit card. For many they have more than one plastic and they can’t keep up with the balance of each of them. It is real, my friends.

Our families do not even have $80 per month for life insurance and we do not have $100 to set aside for our children’s education. Yet, we are driving all these beautiful brand new vehicles and sitting in front of a big $2,000 TV. LIMRA reported in August 2010, that 44% Americans below 40 with children under 18, do not have life insurance. According to a report by Palm Beach Post, July 2, 2010, the average credit card debt is NOW $15,519 in America. If it is at 18% interest and the family pays $300 a month towards the debt, it will take over 93 months to pay that off.

Do we have a problem with our financial education?

What are we passing on to the next generation?

Are we so caught up with being entertained by all the latest gadgets, video games, cell phone games, computer games…
….being numbed out and did not see the crisis that we and our children are facing in the near future?

Back to the question: Do we know how to manage money beyond the piggy bank? Do we learn how to earn, save, invest and spend?

We learnt a great lesson about money from one of our mentors. So we are using their concepts to teach our children about money. The easy concept of 70-10-10-10. That is:

10% charity
10% investment
10% savings/debt payment/fun money
70% spending

It is true that when we walk in the mall or at the local high schools, we see young people with trendy clothing, latest cell phones, nice book bags, driving big trucks or nice cars. Parents willingly pay for the car and latest gadgets for the phones and video games. Our children are so used to this lifestyle. But, upon leaving home for college or a job, the only way to keep up with the lifestyle that they had was to either take up many hours of work or to go into credit card debt.

Parents and young adults, is it just me or do you see the danger that we are facing? I want to raise awareness and help you and I to raise up a generation that are smart with their money, who knows how to earn, save, invest and spend. See the sequence!

Let’s be money smart for the generations we are raising!