Young People & Money

Scholastic achievement is widely considered to be a prerequisite for future success. Problem is, prevailing circumstances throw a bucket of cold water on this longstanding belief. Given the mounting complexities of modern-day life and the perils of our information-age economy, perhaps it's time to rethink conventional wisdom concerning what skill-sets that students must nurture to flourish as newly independent adults. Our educational system was founded on the idea that proficiency in subjects like reading, writing and arithmetic will provide an enduring foundation for personal success. Unfortunately, this view is threatened by a world that's radically changed since 1948 when laws were passed requiring minors to attend school. Over the last 50 years, virtually every aspect of our lives has changed. And yet, strangely, our educational system hasn't; it's remained impressively stagnant in its curricular approach to preparing young minds for 21st century challenges. In short, an institution we rely on to be smart for us has failed to adapt, and this fact is sadly evident in at least one consequential respect.

Ironically, though a degree is a broadly pursued and widely respected symbol of accomplishment, the linkage between scholastic achievement and economic success is tenuous, at best. Although this doozy of a problem has many component parts, one in particular stands out. As a matter of standard operating procedure, students spend their formative years in a classroom setting studying a wide range of subjects. Then, shortly after tossing their tassled graduation caps skyward, adolescents are expected to settle into their professional lives and prosper as newly independent adults--without any personal finance training whatsoever. If high school and college exist to provide teens and twentysomethings the knowledge and skills they'll need to thrive later in life, then a key factor has somehow been overlooked. In an act of omission that borders on cruelty, young adults are lectured and quizzed in a dizzying array of academic topics, and yet, don't acquire the practical financial skills they'll need to competently manage the economic power that their scholastic training will provide. At great cost, our educational system completely neglects this non-trivial aspect of youth development. Dan Ianicolla, the U.S. Treasury's former Deputy Secretary for Financial Education, addressed the seriousness of this problem when he said, “The downstream adult problems of rising bankruptcy rates, low savings rates and the frequent misuse of credit can all be traced upstream to how our educational system fails to prepare young people for their financial futures.”   

In a nation where 33% of high school students and 84% of college undergraduates carries a credit-card, it's surprising that personal finance isn't taught in high school or college. What makes this fact all-the-more remarkable is that, according to the latest research, many young adults are financially illiterate. Few know anything about investing, the importance of building good credit, the mechanics of debt or even how to create a budget and balance a checkbook. Interestingly, though personal finance isn't taught in California's classrooms, the financial industry and some of the biggest names in it have expressed a keen interest in young peoples’ financial awareness. In April 2008, The JumpStart Coalition (a non-profit advocacy group that's funded by a prestigious line-up of for-profit firms, including: Bank of America, Capital One, MasterCard, Wells Fargo and VISA) announced the results of a comprehensive nationwide study to measure high school seniors' financial awareness. The survey instrument, designed by Lewis Mendell, professor of Finance & Managerial Economics at SUNY Buffalo, asked 12th graders to answer 49 multiple-choice questions addressing a wide range of personal finance topics. All told, 6,586 students and 40 states participated in this exhaustive effort. Its findings? Nearly half of high school seniors are financially illiterate. The average score: 48.3%; a result which--interpreted by conventional academic standards--is abysmal.

Given our economy's space-age complexity and the ruinous consequences of financial mistakes, adolescents cannot afford to learn the ABCs of personal finance the old-fashioned way: by stumbling haphazardly through their economic lives learning costly and often painful lessons through trial-and-error on their own. This is a universally urgent matter because, regardless of students' varied academic talents and vocational interests, their proficiency with money (or, to be sure, the lack thereof) will profoundly influence their future prospects. In this day and age, the level of financial knowledge needed to avoid disastrous money mistakes and simply get by has risen sharply. In the blink-of-a-generation, economic circumstances have changed in ways that exaggerate the potential severity of financial mistakes while, at the same time, making it easier to make them. No-doubt, those who came of age before the proliferation of personal computers and the rise of the Internet would, if miraculously wooshed to present day, marvel at what passes for legal tender. Technological progress and financial innovation have fundamentally transformed the world of money. At one time, commercial transactions were commonly associated with the exchange of goods and services for payment in currency that felt real and could be touched, namely: coins and cash. Nowadays, money wafts through cyberspace and is propelled through the electronic ether by transactions originating from the use of credit cards, ATMs, debit-cards, electronic payment kiosks, and over the Internet. For young people who're struggling to make sense of their economic lives (and this includes a sizeable percentage of them), money is deceptively abstract concept. That it can be acquired, borrowed and spent with hi-tech ease underscores the long-term strategic value of financial literacy. Warning signs abound: in recent years, consumers' purchasing power has been magnified by the double-edged miracle of credit and the wheels of commerce are no longer impeded by the irksome obligation of having to carry and pay for things with cash. And yet, our digital economy presents a new series of challenges that most young people are grossly unprepared for. For instance, it's easier than ever for them to casually--and in some cases recklessly--disassociate financial choices from their consequences. Oddly enough, though money is now oddly virtual, the long-term consequences of mismanaging it are as dire as ever. What's more, recent studies show that young people are especially prone to financial error. A 2008 study by the National Association of Retail Collection Attorneys found that 25% of college students think it's reasonable to run up a debt to celebrate with friends and to use credit cards to raise needed cash. Furthermore, 23% of college students say they ignore overdraft fees and are undeterred by the prospect of spending months or even years paying off a debt to bankroll a moment of fun.  

When these economic developments are viewed from a broader 30,000 foot perspective, however, it's clear that workers' day-to-day lives have profoundly changed in other ways as well. How people plan and save for distant financial goals like retirement is also strikingly different. Over the last few decades, employer sponsored pensions have been largely phased-out and replaced with a loosely stitched patchwork of tax-advantaged, self-funded, and personally managed retirement savings accounts (think 401Ks and IRAs). Evidence of this socio-economic shift is plentiful since growing numbers of ordinary Americans are participating in the adventure of capitalism on a far more intimate level. Arcane financial instruments like stocks and bonds (which prior generations of students and aspiring professionals rightly regarded as the exotic playthings of the super-affluent) are now peddled to consumers of all ages. These complex financial instruments are expertly presented as essential building blocks for workers' future economic prosperity. On a macro level, our society's growing reliance on defined contribution plans shifts much of the financial decision-making and risk-taking from employers (who've traditionally shouldered this weighty burden) to employees who, by and large, aren't prepared for this awesome and newly inherited responsibility. To be sure, this would be a trivial matter were it not for the enormity of the future consequences and what prevailing economic circumstances portend for teens and twentysomethings who're a half century away from retirement. What many high school and college students don't yet realize is that the investment decisions they make in their 20s and 30s will probably determine whether they're eating caviar or corn chips in their 60s. The upshot is that young people must become fiscally knowledgable and responsible at a much earlier age than prior generations of young adults. Given the enormous financial strain that millions of retirees will put on entitlement programs like Social Security and Medicare, today's students and aspiring professionals may not have the luxury of a solvent social safety net to rely on 30 or 40 years from now. As a sensible precautionary measure, it might be a good idea for them to acquire the economic coping skills that will enable them to bootstrap their finances and chart their own course for future economic security. Given the worrisome tenor of current economic reality, it's grimly apparent that Generations Y and Z must cultivate a considerable (yet widely absent) degree of practical fiscal expertise and rigorously apply it throughout their paycheck earning years. 

For those who're just starting out in life, this is an important matter because the long-term consequences of fiscal imprudence are gloomily self-evident. Soberingly, one needn't look beyond our sprawling retail sector to glimpse first-hand the shabby lifestyle possibilities that await future generations of aspiring retirees who imprudently manage their finances. This somber message is writ ominously large on the weary and well-lined faces of embittered Wal-Mart Associates, convenience store clerks, fast-food workers and other hapless senior citizens who're clearly toiling well past their youthful primes to supplement a painfully inadequate social security check. To be sure, millions of service sector employees who aren't living the American dream would (if given a chance) eagerly pull today's average youngster aside to offer this poignant nugget of hard-earned life wisdom: "If you're going to transform the average paycheck into the kind of bank balance you'll someday need to support a semi-dignified retirement, don't Mickey Mouse around; you should aggressively acquire the fiscal know-how and discipline necessary to steer this important lifelong process to a successful conclusion. Oh, and don't procrastinate--time is precious; so be careful how you waste it." 

Interestingly, unlike macro or even micro economics (which are sometimes offered as course electives in high school and college), personal finance doesn't grace our golden state's educational agenda. Given California's unenviable economic condition (incidentally, its July 1, 2010 fiscal year budget deficit is $19.1 billion), perhaps this curricular oversight makes good strategic sense. On a less speculative note, however, the notable absence of practical financial instruction in our schools is cause for concern because, as many people who're indentured to their weekly 9-to-5 will readily attest, to make meaningful economic progress throughout their paycheck earning careers, young people must: 1) capitalize on time's wealth compounding power; 2) be mindful of the potentially sizeable opportunity cost of squandering it; 3) sensibly differentiate between "needs" and "wants" in their day-to-day spending routines and, by budgeting effectively, multi-task toward a long list of short-term, intermediate and long-term goals; 4) understand how taxes and inflation work and how they're likely to affect one's long-term economic progress; and finally, 5) understand what stocks, bonds, real estate and commodities are and how these must-have financial assets will perform through varying economic cycles.   

Proficiency in each of these areas is essential because, though Newtonian physics makes the world go-round, it's widely acknowledged that money makes it work. Financial concepts like debt, cash-flow, interest, growth and value are deeply embedded in the capitalist fabric of our mostly free-market economy. Moreover, as guiding tenets, they apply as rigidly to individuals on a micro-level as they do to the institutions that may someday employ them. The recent proliferation of credit cards shows how rapidly economic circumstances have changed. Before they became essential wallet accessories, credit cards were exotic financial power tools that, among other things, endowed their owners with an unmistakable aura of economic prestige. Initially, as a matter of strict operating prudence, credit card companies exhaustively vetted a prospective applicant's financial history and credentials before offering to mint a shiny new plastic card etched with someone's name. Before the introduction and widespread use of credit scores to ease and sensibly price the torrential flow of capital between eager lenders and needy borrowers, just having a credit card was seen as an impressive accomplishment because, as a badge of high-honor, it testified to one's sterling economic character. Remarkably, lending standards have since been loosened to the point that, until the recent passage of consumer friendly legislation to curb abusive lending practices to minors, fiscally naive high school and college students were inundated with offers of in-store financing and "pre-approved" credit card applications sent via snail and e-mail. 

For adolescents, the odds of financial mishap resulting from the misuse of credit are heightened by our consumer culture's pervasive influence. In many of our nation's renowned cities and towns, shopping is no longer merely an idle distraction, but rather, a celebrated national passtime. And since young people aren't particularly well-known for their fiscal restraint and they seldom pause to ponder the future implications of their day-to-day spending behavior, they're likely to establish and reinforce poor financial habits that may, in future years, become a burdensome liability. Meanwhile, there are many peripheral factors in play that also nudge adolescents toward fiscal irresponsibility. It doesn't help matters that youth spending is seldom curtailed by the need to satisfy a wide range of other financial obligations, the kind that are irksomely abundant for working professionals--things like a mortgage, household bills and essential living expenses. All-in-all, it seems that young adults are unaccustomed to thinking strategically about their money and the choices they make with it. Moreover, they have little-to-no practical experience in strategically allocating scarce financial resources among competing wants and needs. Because young people are largely unburdened by the weighty economic responsibilities of adulthood and since many young consumers can acquire money simply by extending their hands and asking bank of Mom and/or Dad for it, they're all-the-more likely to harbor a false sense of economic reality. Moreover, substantial numbers of teens and twentysomethings are dimly aware of the behind-the-scenes difficulty of obtaining money without the timely aid of an ATM or credit card. This temporary (albeit delightful) reprieve from the economic banality of everyday life leaves many adolescents temperamentally unprepared for the profoundly important work of responsibly managing their personal finances as soon-to-be independent adults. 

Alas, there's yet another sizeable dimension to this problem. When it comes to shaping young peoples' economic expectations and relationship with money, corporations wield tremendous influence. Of course, profit driven firms that specialize in catering to the whims and wants of this artificially affluent demographic are understandably keen to court and accommodate their yen to spend. And the numbers tell quite a tale. Collectively, corporations spend billions every year on glitzy marketing campaigns that are artfully designed to appeal to, and, if at all possible, exploit adolescents' unique sensibilities. Companies are very persuasive in their well-coordinated efforts to coax young people to open their wallets for the goods and services they manufacture. Think adolescents lack substantive economic clout? Think again. According to Packaged Facts, tweens (consumers between the ages of 8 to 14) directly or indirectly influence $40 billion in spending each year. By 2011, spending by young adults is expected to reach $209 billion. Not surprisingly, high school and college students are hammered with commercial messaging that's designed to strip them of their dollars and, in the process, sell them everything from fast food and fashion accessories to cell phones and sneakers--and everything in-between. Now, in the tug-of-war that's being waged for young peoples’ hearts and minds, there seems to be a palpable tension between commercial and academic influences. Though, at any given moment, it's not easy to tell which side is winning, it's revealing that shopping centers in the U.S. now outnumber high schools and they attract over 200 million consumers a month. Interestingly, in many states, the biggest tourist draw is no longer a historical, cultural or even natural attraction: it’s a mall.

Alas, there could be a dark side to all of this commercial stimulus. In October 2006, Lorrin Koran, professor emeritus of psychiatry at Stanford University, published the findings of a first-ever study documenting the prevalence of compulsive spending disorder. Koran found that over 5% of U.S. adults suffer from this condition. Commenting on the study’s findings, Koran observes “compulsive shopping can cause people to go deeply into debt and even lie to loved ones about purchases. Long-term consequences can include bankruptcy, divorce, embezzlement, and even suicide.” Though adolescents may be unlikely to engage in these overtly self-destructive patterns of fiscal misbehavior, they face daunting economic headwinds on other fronts as well: low personal savings rates; rising living costs; the soaring price of college tuition; stagnating wages; tightened bankruptcy laws; and the economic imperatives of globalization collectively pose a far more imminent threat to young peoples’ future economic welfare.

In recent years, signs of financial stress have become increasingly prominent among high school and college students. According to BusinessWeek (Nov. 14, 2005), in 2004, the average credit card debt among 25-to-34 year olds was $5,200—a 98% increase from 1992 levels. Although this may not seem like a crippling sum, it’s just the median amount; half of young adults owe more. Spiraling education costs are equally troubling. According to Kiplinger (Oct. 2008), in 2006, the average debt carried by college graduates was $16,432 and the maximum debt carried by the top 8% of student borrowers was $40,000. Robert D. Manning, author of Credit Card Nation, warns “Young people are taking on levels of debt that were completely inaccessible to prior generations. And this is because access to credit is no longer based strictly on income.” Manning cautions that “Generations X and Y have a razor-thin margin for financial error.” Tamara Draut, author of Strapped: Why America's 20- and 30- Somethings Can't Get Ahead, says “...this debt-for-diploma system is strangling our young people right when they're starting out in life. It's creating a sense of futility, a sense that, no matter what they do they're not going to be able to get ahead.” Financial stress is redefining young peoples' lifestyle expectations in other ways as well. Increasingly, graduates are finishing school and moving back home to live with their parents. According to Money Magazine (Oct. 2006), although 25% of children between the ages of 18 to 24 lived with their parents in 1990, ten years later this figure swelled to 52%. Meanwhile, the vice-like power of the pocketbook appears to be crimping young peoples' prospects in other ways as well. Many are putting-off buying their first home, postponing marriage and delaying having children. Numerous books—including Young, Fabulous, and Broke by Suze Orman, Boomerang Nation by Elina Furman, and Generation Debt by Anya Kamenet—offer a forensic accounting of the financial adversities young people now face.

Though it's commonsensical to conclude that teens and twentysomethings would benefit from personal finance training, government officials who're responsible for crafting and implementing educational policy apparently don't deem this non-trivial topic to be worthy of formal study. At the time of this writing, only seven states (Alabama, Georgia, Idaho, Illinois, Kentucky, New York, and Utah) offer financial literacy training and require high school students to meet minimum proficiency standards in this topic before graduating the 12th grade. Given the considerable advantage of knowing how to competently manage money (which, interestingly enough, is the very lifeblood of one's labors) and avoid spectacular economic mistakes, a reasonable person might expect the Department of Education to implement personal finance standards nationwide.

This hasn’t happened; but, as we'll soon see, the problem is largely one of context. The Department of Education is ill-equipped to tackle this issue and the dysfuntional economics of education are hugely responsible. With massive budgetary shortfalls forcing California schools to selectively shed teachers and trim elective programming in areas like art, music and physical education, there's legitimate cause for skepticism as to when or even if California's public schools will acquire the political will and wallet necessary to make youth financial literacy a meaningful priority. On a big-picture level, the economics of education are subtly undermined by the mushrooming legacy cost of paying healthcare and retirement benefits to a sizeable (though, to be sure, still growing) population of already retired teachers and other school staff. Collectively, these factors put a whopper of a fiscal strain on a system that's frightfully underfunded as it is. Add to this a mounting sense of political urgency to bolster student performance in more conventional subjects like reading, writing, and arithmetic, and it's readily apparent why youth financial literacy may not soon grace our Golden State's educational agenda.

As a kind of P.S. to the above, the business of education is also impaired by a debilitating structural problem as well. By and large, public schools are slow to innovate and respond to modern day needs because they face little-to-no competitive pressure from the private sector when it comes to the massive and mostly unrivaled nationwide scale and scope of educational services they provide. Unlike the private sector, where a firm's survival depends largely on its ability to correctly anticipate and respond to its customers' needs in a dynamic and fiercely competitive environment, public education operates in a far more sedate arena; one in which its "customers" are, by force of law, a captive audience. To be sure, this cozy dynamic doesn't properly incentivize our educational system to aggressively rehabilitate and refresh its value proposition. In short, because the Department of Education is thickly insulated from free-market forces and the adaptive qualities that they forcibly foster, it can afford to be somewhat indifferent to the needs of the youthful and politically disempowered constituency that it serves. Bill Gates, an iconic and reasonably astute businessman, has (with characteristic brashness) questioned our educational system; he's said, “America’s high schools are obsolete. By obsolete, I don’t just mean that our high schools are broken, flawed, and under-funded… By obsolete, I mean that our high schools—even when they’re working exactly as designed—cannot teach our kids what they need to know today… This is not an accident or a flaw in the system; it is the system.”

But this raises a titillating question: is the absence of personal finance training likely to hinder students’ future economic progress? Or, to rephrase this question, is there any empirical evidence to suggest that there's a causal link between financial knowledge and personal affluence? There is. A study by Annamaria Lusardi, professor of economics at Dartmouth College, and Olivia Mitchell, professor of insurance and risk-management at the University of Pennsylvania, offers worthwhile perspective. After quizzing people on simple calculations, such as compound interest and percentages, and then comparing their knowledge to their net-worth, they found a strong correlation between a person's financial aptitude and economic affluence. To wit, those who understand the mechanics of compound interest have a median net-worth of $309,000 vs. $116,000 for those who missed such questions.

Apart from financial literacy's dazzling long-term payoff, however, there happen to be other equally compelling reasons for students to preemptively bone-up on the financial basics. you see, financial knowledge and its productive application to everyday decisions isn't merely an economic matter; more importantly, it's a quality of life issue. A generation or so ago, financial literacy was arguably a less influential determinant of one's future prospects. For a good many years, conventional wisdom stubbornly held that finishing school and finding a secure job with a stable (and preferably blue-chip) employer was the Holy Grail of long-term success. Of course, this thinking was in vogue at a time when large paternalistic firms could, by and large, be safely trusted to look after their employees' interests, pay their healthcare expenses, and, at the far end of a 30+ year career, spring for a gold watch and a cozy retirement. With the dawn of the 21st century, the brutal economic imperatives of globalization and the reduction or outright removal of trade barriers between highly competitive good and service producing nations, it's worth rethinking the validity of time honored socio-economic thinking. Outside of a dwindling list of government and tenured teaching jobs, lifetime employment is frustratingly elusive. And the quickening pace of turnover in the workplace puts an exclamation mark on this point. As recent news headlines somberly attest, the sudden collapse of seemingly stalwart and once widely respected firms (think Enron, WorldCom, AIG, Freddie Mac, Lehman Brothers, as well as a growing list of U.S. banks and several reputable U.S. automakers) has disrupted the uneasy status-quo that's existed between private sector employers and employees. And this whopper of a mega-trend is starkly evident in recent economic statistics. The middle-class is rapidly thinning as millions of presumably loyal and hard-working rank-and-file employees have found themselves either unemployed or underemployed. Meanwhile, an alarming number of workers are having to cope with the added indignity of diminished future economic security thanks to dubiously permissive accounting schemes that have enabled public and private institutions to egregiously underfund their employees' pension and health care obligations. Barron's, a popular and widely read investment weekly, recently reported that, among S&P 500 companies, only 25 or so have fully funded employee pension plans. To be sure, there's no shortage of weighty ballast to support the argument that modern-day circumstances require a significant but sorely neglected emphasis on financial literacy in our schools.  

All of which begs a fundamentally deeper question: will today's students and tomorrow's working professionals live the American dream by relying on diligent work and devoted service to one or even multiple employers to pave the way to the good life? Recent statistics suggest otherwise. On average, nascent professionals are expected to switch careers ten times over the course of their careers. The fiscal stress of frequent unemployment undercores a mounting sense of urgency to provide young people the fiscal coping skills they'll need to safely negotiate the economic pot holes they're likely to encounter on the long wendy road of life. Somewhat troublingly, even highly educated college grads aren't entirely exempt from these worldly concerns. According to the Bureau of Labor and Statistics, among working college grads, half are now in positions that don't require degrees. Moreover, median compensation for Americans 25 and under who have a four-year degree has actually fallen 12% from 2000 to 2008. Moreover, it turns out that the economic malaise triggered by our financial sector's near collapse has disturbing long-term implications for young peoples' future standard of living. Lisa Kahn, a Yale economist, exhaustively studied the lifetime impact of recessions on young workers' future earning power and, after examining college graduate career paths from 1979 to 1989, found that, for every 1% increase in the national unemployment rate, starting incomes of new graduates fall by as much as 7%. 

Although perfect grades and a sterling extra-curricular record will attract the favor of discerning employers, scholastic accomplishment doesn't provide students the practical fiscal know-how to intelligently manage an income. Thomas Stanley, who studied the habits and histories of the super-affluent for his book, The Millionaire Mind, found little-to-no correlation between academic achievement and economic affluence. Of the millionaires he sampled, the median college GPA was 2.9 and the average SAT score was 1190; hardly the sort of academic pedigree needed to get into Harvard. And even those few and truly exceptional students who succesfully claw their way into an Ivy League school, graduate with sought after skills, and parlay their enviable academic record into an obscenely lucrative paycheck aren't assured much in the way of long-term financial security either. And the reason for this are simple: academic success doesn't guarantee economic success. So, apart from the obscure advantages that are conferred by a mostly academic education, teens and twentysomethings might benefit even more by acquiring the fiscal sophistication to intelligenty manage a steady paycheck. 

But sadly, this is all part-and-parcel of a broader and much thornier dilemma: financial responsibility can’t be legislated. In other words, the decision to forego consumption and nurture personal savings is strictly a matter of discretionary choice. Luckily, this hasn’t discouraged our elected representatives in Congress from enacting bold forward-thinking legislation that requires employers (of a certain size) to automatically enroll new hires in 401K plans. The idea is that newly minted professionals will be sufficiently inspired to continue bankrolling their own retirements. Apart from being able to opt-out of this clever default arrangement, the long-term results of such a band-aid approach is (to be kind) questionable. If young people are to make the many sacrifices necessary to brighten their future economic welfare, it stands to reason that their financial decisions should be guided by an appropriate sense of personal urgency and a clear unvarnished appraisal of the long-term challenges they face. Somewhat bizarrely, though the term “ownership society” is frequently bandied about by jabbering politicians and our chatterbox media, there’s been no substantive follow-up explanation of what, exactly, this cryptically undefined term means. If young people aren't very careful, they may soon find out.

Though parents have long been responsible for teaching their kids the ABCs of personal finance, many Moms and Dads are understandably irked by the mounting complexity of their own financial lives. In truth, this is hardly surprising. Roughly a generation ago, knowing how to handle a checkbook and maintain a savings account was enough to get by. Nowadays, however, young peoples' future welfare is inextricably linked to their nuanced understanding of credit scores; the mechanics of debt; investment acumen, and various other factors that, until recently, didn't exist or were practically irrelevant. To be sure, getting ahead in today's complex hi-tech world requires a good deal more than a semi-steady paycheck (a need which our educational system narrowly addresses); it requires financial literacy and its rigorous application to everyday life. To maximize the economic value of an academic education, high school and college students must know how to: 1) construct and live within the confines of a sensible budget; 2) select, manage and periodically re-balance their retirement and brokerage account assets; 3) use personal finance software to track and monitor their spending and measure their economic progress over time; 4) responsibly manage debt; 5) establish and protect their credit to minimize future borrowing costs; 6) explain how state and federal taxes work and understand why they account for the sizeable disparity between one's gross and net pay; 7) combat inflation's wealth pinching effects; and finally,  8) balance a checkbook.

Though many parents are understandably keen for their kids to morph into fiscally productive and mostly self-reliant adults; many Moms and Dads are unable to provide their kids the comprehensive fiscal training they'll need to flourish later in life. All too often, time strapped parents are overwhelmed by the increasing demands of work and home. And the facts bear this out. According to a Fleet Boston study (acquired by Bank of America years ago) only 25% of parents feel confident in their ability to teach their kids the ins-and-outs of personal finance. Moreover, nearly half of parents readily confess that they don't set a good example for their children in how they manage their household finances. A study by VISA reveals that (81%) of parents think that personal finance should be taught in school.

As an addendum to the above, although financial literacy helps high school and college students, it indirectly benefits parents as well. Why? Because, as many veteran parents will correctly guess, when their children encounter fiscal trouble they'll generally respond by hitting up Bank of Mom and/or Dad for a hefty dose of financial stimulus. And, rightly or wrongly, when it comes to rescuing their children from fiscal discomfort, parents often feel obliged to reach for their wallets or pay a visit to the nearest ATM. Meanwhile, the underlying problem--young peoples' imperfect relationship with money--is charitably dismissed as a one-time incident and it's usually ignored. Needless to say--but, of course, I'll say it anyway--this is a costly remedy for all concerned. Why? Because adolescents who don't learn to prudently manage money effectively will be costlier to raise. But here's the real kicker: apart from reducing the weighty fiscal burdens of parenthood (incidentally, they say it takes a quarter million bucks to comfortably raise a kid from age 0 to 18), this column and Money 101 workshops will also improve parents' psychic quality of life by sparing them the daunting (and mostly thankless) chore of having to intermittently lecture their kids about the importance of managing their finances responsibly and explaining (with varying degrees of success) how they can do so. And because money is often an emotionally charged topic, the recurring prospect of strained or sometimes stormy parent-child relationships can thwart productive communication on this important topic. Given the complexity of our information age economy, many parents are understandably concerned about their kids' fiscal knowledge. For instance, a 2008 Parents & Money survey by Charles Schwab found that 93% of parents with teens are concerned that their kids will make financial mistakes that include: overspending and living beyond their means (67%), getting in over their heads with credit card debt (65%), failing to save for emergencies (60%), or failing to stick to a budget (57%). Moreover, a third of parents anticipate that their golden years will involve helping their kids financially. In 2008, The Hartford Financial Services Group polled parents whose children are between the ages 16 to 24 and found that 55% of respondents are worried about their kid's ability to become financially independent without ongoing monetary assistance from them.

Until now, parents looking to provide their children a solid and sufficiently well-rounded financial education have faced a painful choice: they could either 1) muddle through this nettlesome topic on their own and hope for the best, or 2) trust their children to learn the ABCs of personal finance on their own while, at the same time, avoiding economic disaster along the way. For parents caught on the horns of this dilemma, this column and Money 101 workshops offer a convenient, cost-effective turn-key solution. Relevant articles as well as personalized and interactive lesson plans will familiarize students with everything from the nuts-and-bolts of budgeting and taxes on up through the basics of investing and planning for retirement—and everything in between.