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Financial Planning content provided by Northwestern Mutual Financial Network

Growing a Financially Savvy Generation Starts at Home

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. 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.

With all this disposable cash available to children and American's 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. TheMint.org 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.

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. 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 talking about the “value” of financial planning and savings.

For more information, please visit the Northwestern Mutual Financial Network website at www.nmfn.com.