All parents want to give their children the best start in life. And most recognize that providing their offspring with good money management skills and knowledge can provide invaluable advantages in adulthood. Yet many are failing to provide effective lessons.

When, in July 2013, Capital One asked parents whether they thought they were doing enough to educate their kids about personal finances, 69 percent said yes. And yet, in the same survey, only 47 percent of teenagers reported sitting down with their parents to develop personal budgets and saving plans. For all their good intentions, many American parents are failing their children when it comes to money-management education.

Kids crave financial education

That disconnect may be startling, but it’s also understandable. A whole lot of parents see their main role as protecting their youngsters from the nastier sides of life (and few of those sides have the potential to be nastier than money), and are desperate to provide a carefree childhood that lasts as long as possible. But denying kids an early appreciation of money, and the skills and knowledge to manage it, can be harmful in later life.

And kids themselves recognize that. Earlier this year, Discover commissioned a survey for its Pathway to Financial Success program. It found that among high school seniors:

1. The No. 1 prerequisite for future personal success was perceived to be the ability to manage money and personal finances. Actually, it was joint No. 1, tying with math, but it was prioritized above science, technology and all other knowledge and skills.
2. Very nearly half regretted not having been taught about personal finance while in school — a high number, given that the subject was, in 2011, on the high school curriculum in 14 states, according to the Council for Economic Education.
3. A whopping (given teen lifestyles) one-in-three reported already having had issues with their own finances.
4. Just 34 percent felt very confident in their personal money-management abilities.

Back-to-school a learning opportunity?

Capital One suggests that parents could use this year’s back-to-school shopping as a teachable moment that could spur a wider education program. It proposes involving kids in compiling lists of what’s needed, drawing up budgets, and comparison shopping online for the best prices. Mom and dad can then go on to encourage healthy saving practices. It even recommends involving appropriately aged children in the day-to-day management of household finances, so they can learn how to write checks, balance budgets, understand the need to pay bills promptly, and discover the real costs of necessities such as utilities, mortgage/rent and car payments, and so on.

All these practical ideas could prove effective. The Organization for Economic Cooperation and Development (OECD) says: “Research shows that it [financial education] achieves maximum impact when the lessons learned can be applied in practice.”

Starting young is good

That OECD report goes on: “Habits like saving and visiting your local bank are best developed at an early age.” Now, the OECD is an international organization, and it may be that American kids would be more comfortable managing online savings accounts using their tablets and smartphones than standing in line at a local bank branch (they’re more online than in line), but the central point remains: it’s almost impossible to be too young to start saving. Indeed, the National Financial Educators Council suggests beginning to teach children about money as soon as they can count (typically at 2 years old, it says), and estimates that long-term patterns of financial behavior are often established between the ages of 8 and 14.

For most people, even that upper age would be way too young to even think about giving kids credit cards, but (depending on legal constraints and issuers’ policies), it may be worth considering providing a prepaid card. Just as it’s useful to learn young about writing checks, it can be good to know how cards work — and to recognize that income and expenditure are linked, even when using plastic.

Generational challenges

By now you may be thinking: Well, my schools and parents never taught me about money management, and I did all right. Well, yes, though maybe you’ve been lucky. After all, plenty of adults have struggled financially, especially in recent years. But the future for today’s children looks even less certain.

In Kids Could Consign Credit Cards To History, we recently reported on the impact of student loan debt, which currently stands at more than $1 trillion nationwide. On average, it currently takes someone 21.1 years to pay back a student loan. If, as some suspect, the future holds less job security and higher interest rates, today’s children could soon be shouldering an even more onerous and even longer-term burden.

And there’s another factor that could make it even more important for kids to be savvy about money: In 2009, Bloomberg reported research published in The Lancet, a highly respectable medical journal, that suggested more than half of all babies now being born in the United States will live to celebrate their 100th birthdays. If that forecast proves accurate, and care costs for the elderly continue to rise, today’s kids are going to need all the financial acumen they can get.

Published 08/05/13 (Modified 11/20/13)