"What parents have learned about money, they’ve learned from painful mistakes they’d rather not have their children experience. "
Welcome to a new world where children begin planning for retirement in fifth grade and 6-year-olds know more about cryptocurrency than most adults. This new reality is part of a massive, multicultural shift in countries around the world. Children are being schooled in money management and investment long before most have their first jobs.
The reasons for the early introduction are varied, but boil down to two connected predictions: children will have to manage money better than their parents to keep economies afloat, and, children will inherit a far worse income-to-cost-of-living ratio than previous generations. Though the first concern has not been fully borne out by research, several studies back up the latter.
In evidence is an explosion of programmes and summer camps designed to immerse children in the culture of finance from the time they can pick up crayons until secondary school graduation. With the twin plagues of soaring personal debt and lack of savings bearing down on many nations, children are being exposed to financial realities at ever-younger ages. For nations trying to elevate their global economic status, educating children in finance, investment, and entrepreneurship is seen as key to achieving those goals.
In the US, investment-focused summer camps are moving into the space long occupied by aquatic, artistic, and scientific endeavours. Children are taking multi-week courses at places like Camp Millionaire, which offers live and virtual camp sessions during summer break. The camp’s website promises fun, but the topics of the daily sessions don’t evoke images of frivolity. Children from 10 to 17 sit through lessons on the dangers of debt, the importance of savings, and an introduction to investing. Camp Millionaire makes a case to parents for the seemingly adult syllabus: you don’t want your kids to be like you.
Far too often, parents tell us they still don’t have a clue how to manage their money or invest it for the future. What they have learned about money they’ve learned from painful financial mistakes they’d rather not have their children have to experience. The fact is, if we don’t set good financial examples and make sure we teach our kids and teens how to use money wisely so they can live successfully on their own, there’s a good chance that no one else will.
Both private enterprise and government have snatched the start-’em-early baton and run with it. The University of Houston offers a monster one-day course to younger teens called The Middle School MBA: the course description asks, “why wait for grad school?” The company that runs Camp Millionaire, Creative Wealth International (CWT), aims younger. CWI has published a colouring book featuring a mouse with quotes in oversized blurbs. One example: “You are the CEO of your own life.” In Japan, a government program teaches school children about banking and investing by using a popular children’s cartoon character, which is an anthropomorphised bowel movement. (Yes, the character is a walking, talking poop.)
The idea of teaching young children both the mechanics and importance of investment has seeped into the mainstream, even though studies show that most American families, at least, are not teaching their children about money. In March 2022, USA Today published a primer on custodial accounts, long-term investment vehicles opened by parents on behalf of their children. While the adult makes the official financial decisions until the child is 18, the idea is to manage the account together:
Learning how to invest is similar to learning how to ride a bike. You start with the basics of how to pedal, keep your balance and steadily ride off into the sun. Teaching children the principles of investing is not all that different.
Some banks offer brokerage accounts for teens to manage on their own. Other ideas floated by nonprofits and financial advisors include making college savings accounts a family affair, allowing children to help structure investments while learning about high- and low-risk options, as well as the long-term implications of different choices. Wendy Baum, a financial advisor with Equitable Advisors, told Forbes Advisor there are myriad options for families.
“Simple brokerage accounts are great for children,” says Baum. “They have minimal fees and provide for a buy-and-hold strategy for long-term investing. In a brokerage account, stocks, bonds, mutual funds and ETFs can be purchased for a variety of investment options. Involving children in a few select stock picks is also a great way to get them interested in investing at an early age.”
In the United Kingdom, the government has gotten into the mix, offering Junior Individual Savings Accounts — known as ISAs or Jisas — for the children of all Crown civil servants. The options include a stocks and shares account, which children can manage on their own at age 16 (though withdrawal privileges are not granted until they are 18). If the yearly maximum is invested, a young person could be sitting on quite a pile of cash by age 18, suggests an article in the British financial publication, This is Money:
If you are in the enviable position of being able to invest the £9,000 ($11,000) maximum for 18 years, the child would have £290,000 ($350,000) by the time they were able to access it — assuming annual investment returns of six per cent.
As with the UK’s Junior ISA offerings, many financial literacy and investment programmes for youth are managed by the government. In Pakistan, the National Institute of Banking and Finance (NIBAF) has launched a massive programme aimed at boosting the nation’s economic standing. To Pakistanis, children are literally the future of the country.
The National Financial Literacy Program for Youth (NFLP-Y) offers essential financial education to Pakistanis aged 9 to 17. The programme is also open to young adults up to age 29, referred to as “youth”. Accessible live and via digital platforms, Pakistani youth are learning basics, such as financial terminology, budgeting, and banking. NFLP-Y also connects children and their families to financial institutions that offer banking products and investment services. More than 425 financial institutions and businesses participate. NFLP-Y also features a large internship program and opportunities for program graduates to increase their wealth, as it were, by becoming NFLP-Y instructors.
The 5-year program is in its fourth year, having trained 1.2 million children and teens. With a year and a half to go, NFLP-Y is on track to meet its goal of training 1.6 million young Pakistanis.
Syed Sajid Ali, director of learning and development at NIBAF, explained the programme's vision on the NFLP-Y website:
Pakistan can only achieve a higher economic growth if we can inculcate a saving culture amongst the different segments of society. Everyone who earns an income is a potential saver. Every saver is a potential investor. And every investor ought to be financially literate. The objective of NFLP-Y is to not only impart basic financial education among Pakistani youth but to also encourage the entrepreneurial spirit.
In the US, where most financial and investment education is privatised, options are many. The US Treasury does have a youth-focused financial literacy programme, but it primarily includes lesson plans and suggestions for children’s activities, such as collecting coins from the US Mint (which, of course, makes the government money first and foremost). Some public high schools offer financial literacy courses, but they are neither widely available nor a part of a focused national push as in Pakistan.
There are scholarships available for Camp Millionaire and other programmes that teach children about the financial world. Generally, to co-opt the common American saying, it takes money to teach your children about money.
As to the aforementioned Middle School MBA: for about $280, kids aged 13 to 16 can earn this "advanced degree" in the space of one very intense day at the University of Houston. The speed-of-light course claims to accomplish… well, kinda everything. The university also claims the kids will “love every minute” of the session, which features competition between its young participants. Here’s a course description:
It’s where the rubber meets the road for Business, Economics, and Entrepreneurship! Kids negotiate head to head, build products and P&L’s, pitch to investors, optimize factories, put their own money at risk, and love every minute of it! Along the way, they get a deep, integrated understanding of all the fundamentals…., Supply/Demand, Opportunity Cost, Payback, Capital, Price Structure….
Ivy Camps USA offers children as young as 6 a chance to immerse themselves in the world of stocks and cryptocurrency. The 10-week course is available all year and can be taken digitally or live at several different locations. Camp Ivy promises to teach kids more about the markets, economy, and crypto than many of their parents know. Topics covered: building a diverse financial portfolio, how to balance risk and reward, similarities and differences between different kinds of cryptocurrencies including Bitcoin and Ethereum, and “how to build their skills in areas such as finance, data analysis, critical thinking, problem-solving, and innovation.”
Is all of this too much for children, especially those in elementary school?
No, Economic Times-India correspondent Uma Sashikant wrote in a 2022 essay. Sashikant has made financial literacy a family affair since her children were young, arguing that “real-world” knowledge gives school curriculum actual meaning. Sashikant asked her children to create budgets for things such as toys and outings with friends, eventually extending those efforts to collaborative family financial decisions, such as vacation spending and savings.
Much of our childhood maths and science lessons are lost to us as adults because we did not have the opportunity to contextualise and apply. Money lessons are best retained if the context is presented alongside. I could write a column about fixed versus floating rate mortgages, but you would care about it only when you are taking out a home loan and have to make that decision. Otherwise, it will be read and forgotten.
Children look at the way decisions are made in the household and learn. Involve them in the choices you make. Allow them to make selections. They will enjoy the process. In this day of limited conversations at home, find new grounds for discussions. Children bring a fresh perspective and will surprise you with their abilities at decision-making.
A 2022 joint CNBC-Acorns survey of American adults showed that, while 83% of all polled believed parents were responsible for teaching their children financial literacy, only 15% of the parents surveyed actually did so.
In an article about the survey findings, Yanely Espinal argues that the U.S. government needs to provide more funding for high school courses that teach students basic financial literacy and how to save, in addition to the perils of debt. Research shows students who receive financial education at home or in school make better decisions about college financing and have better credit scores.
Espinal, director of educational outreach at Next Gen Personal Finance, a nonprofit personal finance organisation, is the daughter of Dominican parents who did not have a bank account and dealt only in cash.
Failing to include personal finance instruction in public schools would risk perpetuating generational cycles where children whose parents had access to financial education themselves will be able to pass those lessons down, while children whose parents didn’t have access to financial education would be at a disadvantage.
Parents around the world have a wide array of economic barriers and challenges, but the global shift toward teaching financial literacy and imparting investment know-how has given parents and children choices that did not exist a generation ago in homes or schools, nor as government-funded programmes. A new era is afoot.
Some say the economic burden being placed on children is too heavy, but the studies showing parents fear for the economic future of their children are backed up by a whole lot of facts.
In a 2021 CNBC story, researcher David Grusky, director of the Stanford Centre on Poverty and Inequality, said post-Baby-Boom, each generation has been earning less than the previous one when adjusted for inflation: “To be sure, even before the pandemic, children were falling behind their parents’ generation financially. Over the past several decades, there has been a rapid deterioration of the “American Dream,” which has long been understood as a commitment that each generation should do better than the one that preceded it.”
Image by Holden Kolf
Tamara Kerrill Field is Kaiju's Managing Editor. Her writing and commentary on the intersection of race, politics and socioeconomics has been featured in USNews & World Report, the Chicago Tribune, NPR, PBS NewsHour, and other outlets. She lives in Portland, ME.