Sammy Rabbit is pleased to share a new blog series: Your Take. My Take.
The series provides leaders from around the world to share their thinking with Sammy Rabbit and his audience on recent articles and blogs related to financial literacy, money, personal finance, entrepreneurship, education and other select topics.
Our goal is to catalyze discussion and raise awareness on the importance of early age, youth and family financial literacy!
In today's blog we are pleased to feature the "takes" and thinking of:
Amy Irvine, CFP®, EA, Owner of Rooted Planning Group, RootedPG.com;
Tony Steuer, CLU, Financial Preparedness Advocate, TonySteuer.com; and
Richard Busby, PMO Director, and Founder Broadskilling.com.
Amy will give her take on Robin Powell's column titled: Don't Teach Children to Pick Stocks!
Tony and Richard will give their takes on Beverly Harzog's column titled: Majority of Parents Want High Schools to Teach Personal Finance!
THE READ
Don't Teach Children to Pick Stocks by Robin Powell
Open a low-cost global equity index fund in their name or encourage them to invest a portion of their pocket money
YOUR TAKE: Amy Irvine, CFP®
Let's face it, kids will take interest in something that is interesting to them. Let me start with the fact that I don't have children, but I love all my nieces and nephews a great deal. My siblings provide for all their basic wants and needs, so what does a CERTIFIED FINANCIAL PLANNER™ aunt give as a gift? Stock Ownership.
Why do I focus on stock ownership, because when we gift them money to turn around and invest, explaining to them about the S&P 500 does not compute to a 10 year old (which is when we start building their portfolio with them). However, asking them what products or services they use (and their friends use) and why that company might do well in the future - BINGO, they get it.
Each year we talk to them about their next "purchase" as well as any particular holdings they might have and if they should keep those holdings.
That's not to say we don't talk to them about diversification - we absolutely do. We have also been contributing to their 529 plans since they were all born, and we show them the power of savings money and how continued savings adds up, but they do not get excited about the underlying mutual funds or even how much is in their 529 account. They weren't involved in that decision, that investment. But ask them about their "portfolio" and their eyes light up. We are not teaching them to gamble, we are teaching them to be aware of what is going on around them and to translate that into investing.
Discover more about Amy in her Sammy Rabbit childhood money memories interview!
MY TAKE
In 20+ years in financial literacy education I have not encountered an "obsession" with teaching children to pick stocks. That said, I share your opinion "Open a low-cost global equity index fund..."
We in the U.S. have established an environment where many things can cause harm, reinforce immediate gratification & more than tickle the gambling bones of children. A trip to 7/11 or a gas station and the purchase of lottery tickets can do that. Viewing & wagering on sports, etc.
The proliferation of gambling opportunities in the U.S. since the 80's has been staggering. But it isn't the lone factor in cultivating a short term mindset and immediate gratification within children. Arguably far worse, are overexposure to digital devices, the internet, and A.I. They are accelerating short term thinking and the willing surrender of thinking all together. How harmful is that?
If children are going to grow into capable adults able to operate effectively & achieve some level of success they are going to need to learn how to navigate and operate in said environment. Education that emphasizes critical thinking skills is part of the solution that can help lead kids to the conclusion you've stated.
THE READ
Survey: Majority of Parents Want High Schools to Teach Personal Finance via U.S. News and World Report by Beverly Harzog
Although many parents are teaching their kids about money, they want schools to help... more than 83% of parents believe high schools don't do enough to help their kids become financially savvy.
YOUR TAKE: Tony Steuer, CLU | (1st of Two)
Yes. Financial literacy should be woven through the education system from K-12. Personal finance is a basic life skill. It would also make school more applicable to real life. Students would benefit from learning financial math such as compounding interest, internal rate of return and interest rates. While learning geometry and calculus are important, most people will not use those skills beyond college.
The article shows the importance of having an emergency fund. 26% of respondents said they had to make a high tech related purchase. If these respondents are like most Americans and have minimal saving, they most likely used used credit cards for these purchases. And if they didn’t pay off the balance right away, they are now incurring high credit card interest rates for these purchases. An emergency fund could have been used to fund these purchases.
The article also notes that almost 40% of respondents say they used a credit card to pay for school expenses. It is likely that a high percentage of those using a credit card will not pay off the balance and will have to have to pay high interest rates. And, as pointed out, most will not have an understanding of the dangers of compounding interest rates and may fall deeply into debt.
Discover more about Tony in his Sammy Rabbit childhood money memories interview.
YOUR TAKE: Richard Busby, Founder, Broadskilling.com | (2nd of Two)
Never mistake a poor solution for the problem. The problem is students move out of public education unprepared to face a lifetime of large and small financial decisions. Public education is currently a poor solution for this.
Egads, did I just say that education is a poor solution? Yep. Here's why: Public curriculum strategy is not incentivized to enable financial literacy learning. Curriculum incentives include: 1. Aligning with the Common Core (far too general) and 2. Standardized tests. Both support the mechanical math needed, but neither provide practical activities where kids experience the trade-offs between revenue and costs, debt and interest paid, and long term financial planning.
Interestingly, financial literacy (the non mechanical math part) is driven by attitude. The operative learning verb for attitudinal learning is "choose." Financial decisions are, thus, largely driven by choices that are sometimes more emotional ("I want this") than rational ("I need this and I have funding to support the purchase"). Financial literacy is most frequently learned outside of school. If consumer debt is an indicator, then there are many parents failing to model successful financial decisions.
Do I believe in education? Absolutely. But the system is slow to change. I am not standing still. My approach at Broadskilling.com is to provide direct-to-student learning activities that provide:
a) a packaged activity for teachers (easy button for remote learning); and
b) require students to engage in their own personal research about the future economy, and then to identify the relevant skills needed to thrive.
Personal financial management is a foundation for entrepreneurship-readiness (prep for the gig economy).
MY TAKE
I am perplexed. How is this possible? Who are these 17% of parents in school districts across America that are capable of dictating curriculum policy to the other 83%?
Could other factors involved? Is the 83% accurate? What does this say about our education system? These are a few of the questions that hopped and popped through my mind as I read this article.
Sammy Rabbit loves championing and raising awareness on the importance of early age, youth and family financial literacy education.
One of his favorite methods to raise awareness is to share the stories of people and enterprises who want to make a difference in the lives of others, like Jessica Weaver!
IF you would like to be featured in "Your Take - My Take," a Guest Blog or one of the other Sammy blog or social media series listed below, contact us.
---First or Favorite Childhood Money Memory
---Teen, College and Young Adult Financial Literacy Discussion Panel
---Childhood Money Memories Series
---Sammy Rabbit Quote of the Week
If you have questions, suggestions or would like learn more about Sammy Rabbit and his mission, contact us!
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email us at: contact@SammyRabbit.com
