Lloyd S wrote on 08/04/09 8:06 AM

Mr. Orfalea,
I am 39 years old. I have ADD. I have two sons ages 5 and 7 .My 7 year old has ADD too. I own two successfull auto parts stores. I want to teach financial literacy to my kids because I recognize that school doesnt. I explained how it works when you deposit money in a bank account and get interest. He wants to open his own account with money he has. I cant wait to take him. What else would you suggest I do to help teach them?

Thank You

Adrian Shepherd wrote on 08/11/09 8:39 AM

A good place to start to master financial literacy is the CASHFLOW game which is made by Robert Kiyosaki, his book "Rich Dad, Poor Dad" is also an excellent read for anyone that isn't a fan of reading but wants more out of his life financially. He even has a kids cashflow game that is available for free I believe. He has blazed a path for future generations to take control of their lives (I consider myself in that group) and it has lead me down paths I never thought I would take.

Another good way for children to start learning about investing would be to purchase stock for them each X-Mas and birthday, as part of their gift. Explaining to them that they cannot sell it unless it doubles or whatever mark you set. Children will soon pick up on the concept of making money for nothing and get into the act. I think once a child has graduated elementary school they should be able to handle such concepts easily.

Another point to remember is that it's NEVER to late to start. Even if you're in your 50s and have never done investing, it can still be learned.The great thing about money is it is unbiased, man or woman, rich or poor, tall or short, young or old, the same rules apply. The rich simply know how far they can be bent.

Vincent Vo wrote on 09/26/09 8:20 PM

The concepts of personal finance are one of the things that everyone should know, but in reality have little understanding of. This is partially because K-12 students learn about all about US history and algebra, but absolutely nothing about what to do with their paychecks.

Personal finance ought to be a mandatory class in high schools. Perhaps it could teach students to be weary of deceptive credit card marketing and the advantages of a high credit score. They could learn how to avoid debt by buying only what they can afford. Such classes would teach future generations lessons that would have been helpful in preventing the Recession.

Andrew Flachner wrote on 10/02/09 12:22 AM

In terms of learning where your money comes from and where it goes, it pays to remember the your expense column is someone else's income column. I agree with Adrian that Kiyosaki's CASHFLOW game is an excellent way to hammer this point home. Although its a bit pricey ($150-$200), following the rules of the game in real life will lead to financial freedom.

Another tool worth the time of students preparing to embark on the real world is a compounding interest calculator. Before graduates enter Corporate America, purchase their daily Frapuccinos, blow their sign-on bonuses on plasma screens, and lever their income into fancy sports cars, it is usually insightful to see how much even daily expenses could amass to fortunes if saved and invested.

Lindsey Murray wrote on 10/06/09 7:08 AM

I think, just as the story of Carlos Slim Helu shows, financial literacy may be most effective when its roots go all the way back to one's childhood. As a kid, I was taught the value of money through the practice of managing a small allowance and, at the appropriate age, getting a summer job. Managing my own money really taught me the value of a buck and doing this sparked an ongoing consciousness in relation to my spending and saving.
I really wish this lifestyle was taught and continually fostered at the high school and college level. I think that if schools could incorporate how to realistically impart this need for attention, a lot more adults would be going out into the world knowledgeable of how to wisely save and spend their money. Clearly, the alternative is playing out across the country right now as people continue to go into debt and experience many of the other unfortunate outcomes resulting from financial illiteracy.

Jacki Iwanski wrote on 10/25/09 10:16 PM

I agree that financial literacy is a necessary tool for success. Unfortunately, it takes situations like the current economic crisis for people to perk up and realize the importance of money. Since my parents both work in finance, I have been told to save money since childhood. Most kids don't recieve this education from parents and they certainly don't get taught about finance in school. We need to change this by implementing basic money saving classes into the K - 12 curriculum.
In addition, colleges should offer finance classes for all majors that apply to real life situations. My intro finance class didn't teach me anything about investing besides plugging equations into a calculator. If schools could relate saving and finance to real world scenarios, we will be onto something. Students will actually learn lifelong skills that they won't forget two years after graduation.

Laura Cimarelli wrote on 11/16/09 11:08 PM

I agree that college students should be required to take a course in money skills. Our country’s college students are among the most educated, yet it is scary how clueless they are about finances. I recently overheard a conversation among two college students were discussing their credit cards, and one said that he was only paying the minimum amount due. He had no idea that by only paying the minimum amount, he was heading into a large amount of credit card debt. I believe that when students have financial responsibility, they are more likely to have success in the future. Therefore, it is important that children start learning financial responsibility at a young age. For example, when I was seven, I opened my first savings account. My mom taught me to save my money, and I saw that when I saved my money, I could afford to buy more quality things. By learning this concept at a young age, over the years I put the majority of my income in my savings account and have accumulated a lot more money than most of my friends who spend their paychecks the day they receive them. By learning these basic concepts, followed by requiring money skills classes in high school and college, students could learn where to invest and how to manage their money. When society starts embracing the fact that the majority of the population is uneducated about finances, I believe money skills classes will be required for high school graduation.

Dylan wrote on 03/03/10 10:53 PM

I believe a diary would give students a truly useful understanding of their finances because attention to where you spend your money is the only useful financial education a school can provide.

At the end of the day, money is a life and death situation. Choosing to spend more than you earn is not sustainable. Learning this financial lesson can only come from real-world hardships where a student is fully responsible for both their income and their long/short term expenditures. .

Unlike those who choose not to go to college, the majority of college students are not entirely responsible for their income and their expenditures. Students have daily living expenses such as food, gas, housing, etc and they also have expenses like college tuition, unpaid internships, parties, traveling, and networking events. These expenses cannot be met by a full time college student's income and must be subsidized by a parent. This is an investment that a parent makes in their child, but the student cannot understand the strategic decision behind this choice and the student will often spend carelessly while in college.

Some students spend carelessly because their parents provide them with as much money as they need. These students might never understand the lessons that will lead to success.

The majority of students spend carelessly because they have no way of evaluating the investment opportunities around them. For example, it is difficult to weigh out the cost-profit analysis of education, networking events and unpaid internships. Without a definitive answer about where an education, networking events and unpaid internships will lead a student out of college, a student spends without thought, relying on society's advice that anything educational or that expands ones network is profitable.

Since a school cannot teach a student which educational and networking opportunities are worthwhile, I would agree that teaching a student to be attentive to their expenditures is the best and most useful financial experience the University could provide.