Growing a Financially Savvy Generation Starts at Home

By Mike Condrey, Northwestern Mutual Financial Network

After an unprecedented period of economic growth in America, the majority of Americans have come to realize the importance of planning and saving. However, the lack of basic financial literacy among Americans, especially middle and high school students is a serious crisis with potentially long-term consequences.

According to a study by Kid Capital in 2001, kids under age 14 spent $55.7 billion in 1999 and influenced another $250 million in consumer spending. Despite the astonishing amount of money they spend or have at their disposal, kids are remarkably uninformed about money in general, or how to manage it. Financial literacy declined 7% over the past five years according to the Jumpstart Coalition in national testing of high school students in spring 2002. If you are a parent of a teenager, you know that they hold a very narrow view of money; it is dominated by the practice of spending, then saving only to spend more.

The number of 12th graders who have their own credit cards has steadily increased over the past several years to 12.1% in 2002. Almost 40% of high school seniors do not fully understand how finance charges work (2002 Jump$tart Personal Finance Survey). With all this disposable cash available to children and Americans’ current culture of debt and easy credit, how can we – the adults – help them develop sound money management habits?

Parents should first know that while our schools attempt to instill basic economic education by offering classes, the Kids Capital study found that 79% of 16-22 year-olds have never had a personal finance course. Given the importance of families in shaping and reinforcing good financial habits, in addition to helping with homework, parents need to take the lead in teaching basic money management skills as teachers and role models. And experts suggest starting as soon as your kids show an interest in money.

Fortunately, there is good news. There are a growing number of resources to help parents teach the basics of saving, investing, budgeting and managing money. is a Web site developed to present age-appropriate information and explanations on the topics of saving, spending, investing and earning. Sponsored by the Northwestern Mutual Foundation, charitable arm of Northwestern Mutual, the site offers fun and interactive ways to get the facts about money management through games and calculators. For example, have your teen try the Spending Game, which tests how your child would use a credit card over 16 weeks of real-life spending choices.

Other sites to investigate include the National Council on Economic Education at, which features on-line lessons in economics and is the host of Check out the ThinkQuest Stock Game at and test your ability to manage an imaginary $100,000 investment portfolio with your child. If your teen is about to start their first job, provides a great game and a trial run at filling out a W-4 form and learning about withholding taxes.

For those parents who have a child heading to college and he or she has just obtained their first credit card, consider a visit to, to get credit card warning labels with messages such as: Can I afford it? Or if you can eat it, drink it or wear it, it is not an emergency.

It is important to remember that young people learn about many things in life by watching adults. Parents can use everyday savings and spending decisions to teach the basics without making it seem like a lesson. For example: A trip to the grocery store can help young kids learn to be price sensitive, think about the influence of advertising on their decisions and gain an understanding of how much of the family budget goes to food and other incidentals. For older kids, refinancing the mortgage to remodel can be sued to explain interest rates, loan payments and the basics of debt.

Guiding kids to become responsible adults requires discussion on so many important topics including money management. To ensure that our kids grow up to understand the value of money, the risks of credit and the importance of saving for the future, it is never too early to start.

Mike Condrey is the Managing Partner with The Northwestern Mutual Financial Network based in Raleigh, for The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin. To contact Mike Condrey, please call (919) 834-7772 or e-mail him at

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