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When Tennessee reported the third highest bankruptcy rate in the nation in 2011, the Tennessee Treasury Department made it their goal for every elementary classroom across the state to have access to financial literacy education. “We want to equip Tennesseans with resources they need to make sound financial decisions in spending, saving, and investing,” says Shelli King, the Treasury’ Department’s communications director.
After attending one-day training summits, K-8 teachers brought the Financial Fitness for Life curriculum into the classroom. “This program can be worked into any subject, and most importantly, it reaches students both at home and at school,” says King, emphasizing that the ultimate purpose is to transfer conversations about finances from the classroom to the living room.
Gain financial wisdom
Kids can’t become financially savvy if parents don’t talk about how to manage money at home. Rachel Cruze writes about how parents can do just that in her book Smart Money, Smart Kids, one she co-authored with her father, financial author and radio host, Dave Ramsey. Cruze says her parents gained financial wisdom through their lifestyle. “My parents went bankrupt when I was six months old, so I grew up watching them shop consignment, skip vacations, and try to keep the lights on.”
Even after the family’s finances grew stronger, fiscal education became the norm for Cruze into her teen years; her father even offered a matching savings plan he called 401Dave. “401Dave meant whatever money we saved for a car, he would match it,” says Cruze. As a high school student, Cruze saved $8,000 and eagerly took ownership of a car worth twice that at 16. “It was mine, I had worked for it, and it showed in the way I took care of it versus the way my friends took care of cars that had just been given to them.”
Cruze encourages parents to do the same. “Adjust it to your financial situation, but send the steady message to your kids that money is associated with working,” she says, adding that one way her parents did this was to swap the term allowance for commission. “My parents sent very clear signals when it came to money: No work, no pay was the rule in our home.”
Dave Ramsey’s strategy
Ramsey’s own financial turnaround is what led him to develop Financial Peace University (FPU), a program that helps others climb out of debt and take hold of their financial future.
Part of what Ramsey instilled into his children was that money isn’t a bad thing but can very quickly become your master if you aren’t careful. Cruze, who travels and speaks with her dad, say she grew up on the envelope system (putting aside money for specific expenses each month). FPU offers its own version, along with other tools to assist parents in training their children. Financial Peace Junior, for instance, helps kids get organized with commission worksheets along with six books that follow Junior’s adventures in which he learns about work, giving, saving, spending, and integrity.
The Tennessee Treasury Department also has no lack of tools for students state-wide. Not only is the Financial Fitness for Life curriculum proving effective in Tennessee’s classrooms, but the nationally recognized program TN Stars 529 College Savings Plan (tnstars.com) is making college savings attainable.
“Kids are seven times more likely to go to college when they have a college savings account,” says King, “and we want to help Tennesseans do the very best they can with the resources they have.” But elaborate tools aren’t mandatory for raising money-wise kids. Memphis Mom Candice Baxter developed a plan early on to instill financial know-how into her then fifth-grade daughter, Ali. Three containers simplified the process: a piggy bank for saving, a toy ATM complete with debit card and PIN to teach controlled spending, and a simple box with stickers labeled giving.
The training has paid off, as the now high school junior pays her own insurance, phone bill, and is saving for a car. “One way she has saved is through a local bank that pays for grades, enabling her to collect almost $500 since kindergarten, really showing her the power of saving,” says Baxter, adding that part of the money from her “commission” is also reserved for giving, from which her daughter annually makes a donation to the charity of her choice.
But why teach kids to give when you’re trying to teach them to save?
“Giving instills gratitude; it brings contentment that fosters humility, and it’s very challenging to get that sense until you are giving,” Baxter says, adding that perhaps C.S. Lewis offers the best perspective on giving: “It is not thinking less of yourself, but thinking of yourself less.”
Rachel’s Top Three Money Lessons for Parents
We asked Rachel Cruze, co-author of the book Smart Money, Smart Kids with Dave Ramsey, the top three things parents should focus on to raise fiscally fit kids.
- Teach them where money comes from. “Teach your kids to work and that if they don’t work they don’t work, they don’t get paid. If they know where it comes from it changes their perspective
- Teach them to give. It’s very important to teach kids to look beyond themselves. When they are giving they are learning selflessness.
- Be a role model. You’re not going to be perfect but you set an example. Remember, money habits are more caught than taught and you don’t lose parent cards when you make mistakes.