Of course, you can only teach certain levels of personal finance at certain ages. A 5-year-old probably can’t grasp a mutual fund yet. But a 9-year-old should be able to understand a credit card, a loan, and cosigning.
Unfortunately, schools don’t really teach this kind of stuff. And parents don’t seem to (formally) teach it either….maybe they don’t know it themselves, since no one taught them.
I was just reading SJean’s worries for her sister when she mentioned that she (SJean, that is) had unwittingly co-signed 23k worth of student loans for her. She was 21 and her parents asked her to do it because her sister couldn’t get loans otherwise and her parents couldn’t sign. She didn’t think to ask how much the loans were for, interest rate, etc. She trusted her parents to know what she should do.
Now, if her sister defaults on those loans SJean will be liable for them. Including the interest and such.
It may be easy to blame her, her sister, her parents for now knowing. But imagine a time when you didn’t know. Would you have understood all this at 21?
If you were already financially savvy at 21, pick an earlier time like 18, 16, 12…
Because personal finance isn’t taught early, we have to learn it from life. Unfortunately, life doesn’t always let us learn through explanation and observation. Experience may teach us well, but it’s a tough teacher. Teaching personal finance shouldn’t be left to the school of hard knocks if we can help it.