Teach young people the ABC's of finance

By State Senator Gilda Z. Jacobs
Wednesday, May 5, 2010

Teaching financial literacy to our young people today is more important than ever. While many people do manage their credit wisely, others don’t and our society is paying dearly for mismanaged credit and personal finances. Teaching children how to manage their credit and money early will help them live within their financial means as they grow.

Credit is part of our lives. We use it to buy cars, houses, pay for college tuition, replace appliances and fix our homes in an emergency. When I was young, credit cards were usually for a department store, and people only had one or two cards. By the time I entered the work force, universal cards like Visa and MasterCard were the norm. When my daughters entered college it was common for them and their friends, even without full-time jobs, to be barraged by credit card companies.

Young people today are aware of credit cards just as I was aware of paper money when I was a child. I knew that when the money ran out, we were finished shopping. Not all teens and young adults today know that, because they know that we can pay for our purchases “with plastic.”

Our young people have to be taught to treat “plastic” like paper money. They have to be taught that opening multiple credit card accounts is not the best way to establish a credit history. And they have to be taught that when bills come due they have to be paid, and not having the money to cover those bills is not an excuse that creditors will accept. They need to understand how interest rates work, and the money they can save by paying off a balance quickly. They need to consider the benefits of renting or buying a house, or leasing or buying a car. They need to learn how an ARM works compared to a traditional mortgage.

There are many programs that will help students learn about finances. Michigan now allows high schools to offer a financial literacy course to fulfill a math requirement. Government sponsored programs can be found at www.mymoney.gov. Junior Achievement offers a program that can be found at www.ja.org. Even elementary school children can learn about money and finances at www.jumpstart.org.

The Oakland Livingston Human Service Agency will offer a financial education series on two Saturdays, May 8th and May 15th. This is offered in conjunction with the Michigan State Housing Development Authority, and fulfills various mortgage products financial education requirements for families.

To register for either class please call 248-209-2760. Including young people in these classes will teach them valuable lessons about saving for a home no matter what your income level. Other information and ideas about teaching financial literacy can be found at many banks and credit unions.

Financial literacy is a critical component of our children’s education. Teaching our children how to manage their money and credit now will help them grow to be the successful educators, business leaders, and government officials Michigan needs.

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Senator Gilda Jacobs represents the 14th Senate District. She can be reached toll-free in Lansing at 1-888-937-4453. Visit her website at http://www.senate.mi.gov/jacobs/