TRAVERSE CITY — Perhaps the most powerful education we can provide our youth is to teach them how to responsibly handle their personal finances.
Imagine if our students had solid saving and spending habits. They could potentially turn this nation’s economy around in a generation and perpetuate the US legacy of world economic leadership.
Bankrate.com recently published a survey indicating that 46% of US households have less than $800 in savings for an emergency. As the survey points out, we are truly a paycheck-to-paycheck society when only 24% of US households meet the conventional standard of adequate savings to cover six months of expenses. And, with projected US household savings rates falling in 2013 to 2.4%, one of the lowest in the industrialized world, we as a nation are ready to be pushed forward by the good financial habits we can instill in our youth.
My cheeks flushed when I read how IQ scores rose when peasant farmers successfully completed their sugar harvest and knew their families would survive another year. Studies on the psychological effects of economic scarcity are eye-opening. When one faces the continual challenge of meeting basic human needs, much mental focus and energy is needed. Those without these financial concerns, only a minority of us now, have the real freedom to enjoy life and to pursue happiness.
If we can put our kids on auto-pilot to save just a little bit over time, they can create a cushion from which they can absorb challenges that may otherwise cause them to drop out of school and forgo opportunities to improve their long term prospects. How to do this? We have three teenagers: one that spends as he goes, another that saves religiously, and the occasional saver. The ability to set goals and the maturity to sacrifice for the longer term gain seems to be the correlating factor in our household.