Opinions are generally clear about why such a large percentage of the American population winds up in financial jeopardy. There’s no formalized way to learn how to use money properly and with the best results; most people learn by experience. It would save a lot of headaches if we could somehow warn people in advance that they’ll need to consider finances in their choices in their life in order to build wealth over time, and that lesson would have more meaning if we could somehow extol the virtues of financial independence.
Financial literacy advocacy programs try to address this problem. Encouraging good behavior with money at an early age could help increase the probability of achieving financial success in the future. With efforts conforming to this principle, some high schools offer money management classes while some companies like ING Direct offer tools to help younger students learn about money management. Neither of these approaches have been proven to have any long-term positive effect.
I’ve previously discussed the limitations with money management classes in high schools. First of all, if a child doesn’t receive the first lesson with money until he or she is a teenager, the student has already formed an attitude about money that will define the relationship during the important formative years when he or she later begins earning money for living for the first time. At the age when children are forming their money personalities, they are most influenced by parents. If the parents aren’t making an effort to set a good environment and example for handling money, it will negate any effect by a money management class as a teenager.
Most teachers are not trained in personal finance, so they cannot provide the best instruction. And without mandatory money management classes, only a small percentage of students will choose this class as an elective. Those who choose this class make this choice at the expense of other possible electives, many of which enrich the mind rather than purport to enrich the wallet.
At the same time, society can’t rely solely on parents to transmit good financial habits to their children, even if the right tools are provided by outside sources to help those parents.
The problem of poor money management skills manifests itself in lower-income communities more than middle-class areas. Change, in the form of professing the opportunities that one can enjoy through financial independence, must come from within the community. It’s important for successful individuals to be involved with the community, serving as a role model, particularly when parents don’t have the skills or resources to serve in that role. Poor financial management and a lack of economic mobility can become a cycle. As a child grows up without a great financial role model, he or she will continue to be poor role models to his or her children.
The only way out is to break the cycle, and the only way to break the cycle is for successful individuals to assume the job of parents as financial role models.
Photo: Pink Sherbet Photography
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Without a director, none of these recommendations would be required to be enacted by financial firms. Some banks have already taken steps to improve communication, but banks are also regulated by the Federal Reserve. The Fed issued some regulations as part of the 
