The Exchange

Teaching Children Financial Literacy in Uncertain Times

The Exchange

By Jennifer Wheary

The Girl Scouts Research Institute just published a report that should be of interest to parents and economists alike. In a nationwide survey of more than a 1,000 girls ages 8−17 and their families, the institute found that young girls express a mixture of optimism and caution about their financial futures and that parents have an important role to play in helping their children develop sound financial skills.

In Having it All: Girls and Financial Literacy, the Girl Scouts Research Institute reports that the majority of girls strongly desire financial independence. Ninety-four percent would rather make their own money than rely on their parents for support, and 80 percent want to make their own money rather than rely on a spouse in the future. The majority of girls feel that men and women are on the same footing in terms of financial capabilities. Seven out of 10 girls feel men and women are equally likely to be financially responsible, and nearly 8 out of 10 (77 percent) feel men and women are equally likely to run a successful business.

Eighty-six percent of girls feel that both partners should make financial decisions for the household, and 74 percent say that both partners should be responsible for financially supporting the family. Ninety-eight percent of girls feel they will have an enjoyable career; and 96 percent of them feel this career will be sufficient to support their families. Nearly all girls feel they will earn a college degree (95 percent), that they will one day own a home (95 percent), that they will make a lot of money (87 percent), that they will be able to save a lot of money (90 percent), and that they will retire comfortably (92 percent).

These aspirations are laudable. But to make them realistic, especially in an era of intense economic challenges, much work is needed. The Girl Scouts research shows that what most girls want is a modern day, gender-balanced version of the middle class American Dream.

Is it possible?

Undergirding this dream is the reasonable assumption that working hard, first in school and then at a job, leads to financial success and long-term financial stability.

The aftermath of the recession coupled with longer standing economic trends – including stagnant social mobility, increasing inequality, and the rise of low wage jobs – are creating a huge disconnect between these values and the day-to-day experience of millions of American families.

In a Pew survey in August 2012, 85% of middle-class adults reported it is more difficult now than it was a decade ago to maintain their standard of living. This is because the financial security associated with being middle class is fast dissipating.

Today’s youth are growing up surrounded by dire economic news. They live in a world where words like "recession," "unemployment," "foreclosure," "debt," and "inflation" are part of everyday life. There is great value in young people developing an age-appropriate understanding of these economic concepts and their impact, and most importantly in developing financial strategies to combat them. This learning must happen at home, primarily because financial management is not a standard component of K-12 education.

Parents need to be involved

In their research, the Girl Scouts found that girls are likely to go to their parents for information on money and finances, but that parents often fail to communicate with them about these issues. This disconnect is a major setback for girls learning to be financially responsible adults amidst so many possible setbacks.

This recent study shows that girls are ready to combat these forces, and succeed financially. But they need the help of strong adults. In the Girl Scouts survey, barely half (51 percent) of girls said they feel confident making financial decisions, and 38 percent feel that living with debt is a normal part of life.

The Girl Scouts offer parents good advice about where to begin helping children gain financial awareness and confidence. Teaching children the difference between needs and wants and how to save is one starting point. As families face financial challenges themselves, this conservation is essential. Yet it is important to not have it be a limiting one. Day-to-day realities may be tough, but as evidenced by the Girl Scouts’ research, young people are still dreaming. Parents can and should encourage these dreams, and to use them as a motivating force.

This motivation should be directed toward hard work, but also ultimately to taking an active role in not being a victim of larger economic circumstances. For any given girl, this might mean trying to inoculate oneself personally against economic uncertainty. But it also might mean ultimately preparing oneself to take a larger role in affecting economic policy and American business as a whole.

Jennifer Wheary is a senior fellow at Demos where she writes about current trends in education, economic opportunity and positive public policy. She holds an undergraduate degree from Cornell University and a PhD from the University of Illinois. Her writing appears online and in newspapers around the country. You can follow her on Twitter @edteachpolicy.

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