Is Financial Illiteracy Tantamount to Child Abuse?

Below is another op-ed article which was recently published by the following papers:

San Gabriel Valley Tribune (11/9/08)
Nashua Telegraph (11/9/08)

We teach our children to walk and speak, to brush their teeth and hair, and to not talk to strangers, so why aren’t we teaching them about money management and financial wellness?

We deal with money in our everyday lives. Starting at a young age, more so now than ever before, we are exposed to the various aspects of money management and fiscal tools. But, while the nation places an importance on teaching the youth of America about mathematics, science and even sexual health, we neglect to prepare our children for the inevitable matter of personal finance.

Child abuse comes in many forms. Neglect is a failure to provide for a child’s physical needs. Emotional abuse is any behavior that interferes with a child’s mental health or social development. How is not teaching your child about at least the basics necessary to lead a financially healthy adult life not abuse, too?

Financial illiteracy among all Americans is truly reaching epidemic proportions, but it is most prevalent among the young – the generation of tomorrow. The results from a 2008 survey conducted by the Jump$tart Coalition – a financial literacy advocacy group for students ­– show how dire the situation has become. More than 6,500 high school seniors took the group’s 31-question survey and, in general, could only correctly answer 48.3 percent of the questions. That’s down from the 2006 survey when the mean score was 52.4 percent.

Likewise, the average score at http://www.financialliteracyquiz.com/ for participants less than 18 years of age is 29.8 percent. The scores tend to increase with age, perhaps due to experience, but the overall score average score on the quiz is only 53 percent.

Perhaps likening financial illiteracy to child abuse feels like a stretch, but let’s think about the consequences. A child who is neglected is denied adequate supervision, shelter, food, clothing, medical care and/or hygiene. Each of these elements is essential to leading a decent life and also provides the child with a roadmap for adulthood. Will a neglected child grow to be a neglectful parent? Where would he or she learn otherwise?

I’m sure that there are many neglected children that have grown to be responsible adults and loving parents – after all, things like food and shelter are really common sense. But children who do not learn about things like savings and credit are not likely to magically stumble upon the information as they grow up. Instead, they will learn the hard way, through trial and error, sullying their credit and overall financial well being along the way.

Consider the millions of Americans who have lost or are loosing their homes. Or the increasing number of individuals who turn to payday loans — carrying interest rates of up to 400 percent — because they cannot budget for their living expenses. If as children these individuals were given basic guidance in money matters perhaps some of these hardships could be avoided.

Financial illiteracy can be debilitating. Money might not be everything, but fiscal responsibility is key to the American dream – a house, a happy family, a stable job. Beyond that, knowing the basics of personal finance is paramount to survival in an ever-more-complex environment. As a nation, we need to provide the next generation with the financial basics just as we provide them with other necessities of life. To not do so is misguided and even cruel.