As you all know, we provide proactive financial advice on matters such as investment management and value-added services such as tax planning, risk management and estate planning to name a few. Something you probably didn’t know is that earlier this year, we launched a campaign to promote financial literacy for children and young adults! It is called the Young Investors program. Some of our clients have recently become the first recipients of this new program!
Financial literacy is a person’s ability to recognize and use the money and other resources he or she has to get what is needed and wanted. Another way of saying this is that financial literacy is being able to set goals for using financial resources, make plans, and use the plans to meet financial demands and achieve goals. To achieve financial literacy, a person needs to have experiences with money. That is why it is important that children begin to learn about money and its use when they are young.
You might not know this, but financial literacy availability for young children is scarce, primarily because the school systems lack time and budget resources to incorporate financial education into the curriculums. In fact, only 16 states require any instruction in economics between Kindergarten and 12th grade. Even worse, only 7 states require students to take courses in personal finance.
There’s been a greater awareness of this educational need in the past 10 years and some financial-literacy advocacy groups have begun to take some steps to fill this educational void. Some have responded by offering summer camps to young children whose parents want to teach their children the basics of money management. Feedback from many of the attendees is that, believe it or not, they had fun! Of course, we want to join in on the fun, and we are also excited to be a part of the solution.
We know that a financial foundation is best achieved when started early, reviewed, as well as reinforced often. It’s important to teach young children even before they are in school about the concept of money, and that it’s not all about spending! For example, something simple that a parent can start as early as age 3 can have lasting effects for the future. Consider this:
Activity: Tell your toddler that you'll give him a cookie now if he wants it, but you'll give him two cookies if he waits an extra ten minutes. See what he chooses and try to encourage him to wait for the extra cookie.
Lesson Learned: Be patient and wait for a bigger payoff, rather than always going for instant gratification.
Although it might not look like much, it sets the stage for a less impulsive, more thoughtful response, and hopefully not just one involving money in the future!
Thinking about the scenario above, in an article I read the other day from the Wall Street Journal on personal finance summer camps, a 12 year old boy cited some camp attendance takeaways such as stopping and pausing before making purchases and long term planning! I suppose it’s true that small things do matter! And more interesting feedback from the camp directors is that many children ages 10-14 didn’t know what stock and bonds were. Some thought the investments were a form of real estate. Clearly, more attention needs to be given to this area.
We love the opportunities these summer camps offer and hope to provide some of our own financial education to our client families year round. With our financial literacy agenda, our Young Investor program is structured with several tiers of age appropriate interactions and dialogue starters on financial matters for our clients to have with their children or grandchildren. Age appropriate financial suggestions, tools, links to pertinent financial articles and fun activities to engage their minds are some of the content we will be sharing. With the importance of starting as early as possible, we literally start at the very beginning, with newly born children/grandchildren, and capture all ages through the early 20s. Specifically, we break out the tiers in roughly 5 year intervals, so age 0-5 years is the first group, 5-10 years is next, then 10-15 years, with 15-20ish years being the last group. Our goal is that by age 25, the child or grandchild will be more than ready to begin a lifetime of investing!
Even after your children and grandchildren start their careers, it is our hope that they will join our Emerging Investor program, where they can establish their own brokerage accounts with Charles Schwab and have some of the same great DWM advantages and services as their parents and grandparents. We are happy to help them by protecting and growing a diversified portfolio to preserve assets and provide moderate growth with minimal risk.
With our help, the young children of today will come to ask for financial assistance and have some of the best mentors in their lives, YOU! And we all know that money is not an elective in life, so let’s keep the dialogue going with our young generation and keep providing them with good ‘sense’! We hope you find this program to be a valuable experience. As always, please let us know your thoughts or if you need financial assistance with a young investor in your life.