Financial education should start early

Whenever I think about the marshmallow experiment, I’m pretty sure I would have been one of the kids to eat all of the marshmallows at once. The marshmallow test was conducted at Stanford University by putting children in a room with a bowl of marshmallows and asking them to wait before eating one in order to get a better treat later. It was basically a test of self-control for delayed gratification.

It is quite a bummer that I would have failed the test because apparently that is often an indicator for self-control problems later in life. The ones who waited to eat the marshmallows had better grades, BMIs, and pretty much everything else that matters.

Regardless of whether the marshmallow-eating tendencies were caused by nature or nurture, self-control and motivation for delayed gratification were positive qualities. For people like me who probably would have eaten the marshmallows right away, there is still some hope for learning the skills or traits that others possess naturally.

With financial education it is the same way. Time columnist Dan Kaldec argues that a financial education should begin with toddlers. It is important to learn from an early age to wait on the marshmallows in hopes of a greater reward and also to save part of your income to grow into the greater reward.

There are two perks to starting financial education early: teaching self-control to the children lacking motivation for delayed gratification and increasing the amount of savings collected by starting younger. Just starting to save money 10 years earlier can add almost a million dollars to any portfolio by the time a person reaches age 70.

Kaldec quotes Ted Beck, CEO of the National Foundation for Financial Education, “We’re not going to teach a 3-year-old efficient portfolio management, but this is not too young to talk about smart choices.”

Developed nations are leaving the United States far behind in terms of financial education. According to the Time article the percentage of teens who plan on saving a portion of their income is down 33 percent just from 2011.

In a country focused on getting a college degree, having a successful career and achieving greatness, aren’t we forgetting something? Is it a problem that 90 percent of university students graduate without any clue of how to do their own taxes? I would say yes, it is a huge problem.

The lack of financial education in the actual education system puts a giant burden on American parents to begin early with lessons children will utilize for the rest of their lives. Parents need not sit down and teach children how to compile W-2’s and fill out 1040 forms; instead, they should live frugal lives and engage in frequent discussions about the financial choices they have made when the opportunities arise.

Teaching children that money has value and that when spent, the value is gone, is as vital as teaching them not to cry wolf.

Giving an allowance, having ground rules for spending and adding financial tips into daily conversations about money are great ways to lay the foundation for an intelligent saver.

Money management, although not taught in many school classrooms, is arguably one of the most vital tools for a successful and comfortable life. Instilling strong values in children at a young age will change their lives.

With our current growing debt, falling stock market, weakening global currency, and other signs of economic distress, financial education for youth could be a major key to creating a sustainable future economy.