“Financial literacy is not an end in itself, but a means to an end: a more secure financial future.”
– Alan Greenspan
I have to get something off my chest.
My daughter is 12, and I don’t really care what her grades are.
I want her to pass, of course!
She’s actually a great student and I want her to keep doing well.
But good grades don’t determine a person’s future, especially when it comes to finances.
Today, I want to talk about why I don’t care about my kid’s grades.
I care a lot more about her financial future and the steps I can take to help her get started.
Does that sound like something you might want for a child in your life?
Let’s talk about it!
1. The Overemphasis on Academic Grades
Straight As don’t guarantee success.
It’s the skills people have that let them be successful in life, especially soft skills.
STEM skills are great and all, but you should also want your child to get along with others.
They should be a kind person with emotional intelligence.
If they have that baseline, they can learn to work with themselves until eventually, they can understand financial literacy.
My daughter goes to a great school in a nice district.
However, while they do teach a lot of necessary skills, they don’t teach financial literacy.
The few schools that do, though, are shown to have a very positive effect.
When a high school has financial education requirements, the young adults who graduate have fewer defaults and higher credit scores.
Those results are very much tied to a well-prepared teaching staff and curriculum.1
I have a lot of family in education.
My dad’s a college professor.
My mom was a teacher for 30 years.
My grandmother and my sister were teachers.
I have a lot of respect for teachers.
From them, I learned a lot about the education system.
They don’t tend to teach financial skills to kids, which is a big problem.
That’s why, if you have a child, you need to get involved with them at a financial level.
2. The Critical Role of Financial Literacy
A guy in the mastermind I run for passive investors, the Wealth Forum, has several kids.
He brings them to our events and has them read books on finance.
One of his children is 14 years old and has already read Rich Dad, Poor Dad, Think and Grow Rich, and CASHFLOW Quadrant.
He involved himself in his kids’ education because he realized they’re getting certain knowledge from school.
I have so much respect for that.
Although I don’t care much for grades, studies have shown that reading can also increase reading-based test scores.2
So in case you do care a little more about that than I do, it’s a win-win!
But how do you even start?
3. How to Equip Your Child for Financial Success
The bottom line is that you need to talk to your kids about money.
Talk to them about what it means to be successful in life.
If you’re wealthy, you might run into some unique challenges here.
A lot of wealthy kids may feel entitled to their wealth.
In a lot of cases, they never learn how to manage money.
They never learn how to invest.
They never learn how finances truly work.
But they should!
Even if you come from wealth, discussing budgeting should still be a priority.
You never know when a skill like that will come in handy.
There are also a lot of books out there.
Kids can learn about finances from an early age.
They can even learn to start their own business.
Encourage them to read and get involved in their own financial future.
Take the time to invest in your kids’ education – specifically, passing on your own knowledge.
The more you invest in their education, the more they will absorb.
You teaching them will have a much bigger impact than you telling them to go to school and do their best.
Now I want to hear from you!
How are you going to introduce finances to a child in your life?
Let us know in the comments.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. Carly Urban, Maximilian D. Schmeiser, J. Collins and Alexandra Brown. “The effects of high school personal financial education policies on financial behavior.” Economics of Education Review (2020). https://doi.org/10.1016/J.ECONEDUREV.2018.03.006.
2. E. H. Blaabæk. “Reading when the sun does not shine: The effect of reading on children’s academic performance.” Research in Social Stratification and Mobility, 67 (2020): 100485. https://doi.org/10.1016/j.rssm.2020.100485.
