Recently there has been a big push to add more financial education in the schools. Which I love.  The more frequently we can expose our kids to educational materials about finances the better off they will be.

However new studies are showing that it is more than just teaching the kids about actual details of personal finance.  We are missing a critical ingredient in helping our kids master their money. That missing ingredient is more math education.

In fact researchers found that after two years those with personal finance education were not that much further ahead of those that did not get the education.  What did make a difference?  More math classes.

It makes sense, after all finance is math. Thus if you know more math, and are comfortable with numbers then it will be easier to manage your money.  Money can get very emotional, so if you have math skills to fall back on to make decisions, you will have a better chance of making those good decisions.

We don’t want to get rid of the personal finance materials, after all even if you know math if you don’t know what a credit score is, or what a stock is, or how to budget you still will struggle with your money.

What we really need is a well rounded plan for teaching all aspects of personal finance. In my opinion the aspects that we need to teach are the following:

Personal Finance

This is the personal finance specific information that kids must learn to be able to understand our world of finance. This should be taught as early as possible and as frequently as possible.  Most of the lessons build on each other so the earlier we get started the faster our kids will begin to understand money.

Math

As I already mentioned and research is now showing we need to put a renewed emphasis on math success for all students. Math should be a requirement for all four years of high school for all students!

Emotional/Life Training

This is the harder element to teach, but is equally as important as the math and personal finance components.  You can have all the knowledge in the world, but if you are lacking just a couple of these characteristics, then you still won’t be successful with money.

I believe these are critical to financial success:

  • Realistic expectations – our society puts a lot of emphasis on material goods.  While stuff is not bad, the focus on it can skew your child’s understanding of what they can afford on their own and what they cannot.  We want to encourage our kids to reach for the stars while still being realistic about what they actually have today.
  • Goal Setting – this is a fantastic skill for everyone to learn.  When it comes to money it is critical as they need to set goals to be able to achieve what they want.  I want to retire is not quite as powerful as I want three million to retire.  (How to Help Your Child Set Financial Goals.)
  • Perseverance – the ability to set that goal and then stick with it, even when it is hard, is a great way to win financially.

There are many more characteristics that will help, but I do believe these three should be taught to all kids. Money is more than just simple education, it is a multifaceted adventure that your kids will continue down for many years. Lets give our kids a head start and help them learn in all three areas.

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