11/05/2005

No concept of money

I have often wondered where some students get their money. I see them blowing it as if they have an endless supply. Then I think, either they are really lucky or they have no concept of money. This aritcle spoke about how a lot of students do not understand their parents budget and therefore do not realize when they are putting there parents in a bind by asking for more money or wanting to go to a private school. So who is to blame for this? The author says it is the parents' fault because they should have been including their children in the budgeting process for years. If the children are involved in the budgeting process from an early stage in life, then they will better understand the limits on their parents' money supply. Since the majority of our parents do not include us in their budgeting, we do not really know where we stand. Therefore, we just keep asking for money (I am speaking from the view of a student who does get money from parents-that is my case). The major problem with this is, the students do not get a grasp for the value of money and end up being non-educated consumers. In other words, they buy whatever they want without price shopping or searching to see what else is out on the market. By developing such habits we end up with a large group in society will is prone to being in debt. I say this because they will be so used to just asking for money, that when mom and dad quit supplying the money, then tend to turn to credit cards and loans. This is great for business, but horrible for consumer moral in the long-term.

7 comments:

Morgan said...

I think that this post brings up a good point. It really is essential that parents work with their children from a young age to help them understand the value of money. When I was about 8 years old, my parents came with me, and we opened up my first personal savings account. That was the best thing that they could have done for me. Even if parents help their kids when they are in school, or are just starting out, if a person has no concept of how to exercise financial control, or the importance of hard work, parents' financial help will do little to give their children a head start in life.

Chloe said...

I agree with the fact that parents should educate their kids about money. I've grown up punching numbers with my dad and always looking for a good real estate investment. However, I don't think it's necessary to have the kids budget for their parents. Let the kids create their own savings and work out a budget for themselves. Though it is good to be somewhat aware of what your parents make, I don't think it's necessary for a kid to know what their parents salary is until they've learned how to provide for themselves.

Alex said...

I agree with Chloe that maybe rather than having kids work with their parents actual nubmers, they should work with their own numbers. My dad is a banker and he has always been quite strict about how we spend our money, and making sure we budget right. By always having to balance my checkbook, and always knowing where all of my money has gone it has helped me in college to not struggle as much as my roommates seem too.

Jasmine said...

Great article and topic. It's funny, I'm an accounting major and understand number and budgets really well, but I am horrible at setting a personal budget. Looking back on my childhood there wasn't a whole lot of financial education from my parents. Maybe if there had been I'd be a better budgeter today.

Dr. Tufte said...

-1 on Connor's post for spelling errors.

I'd like to add right off the bat that all of you ought to be aware of this problem in spouses or potential spouses as well.

This is a problem that has reached a tipping point in the national consciousness. Expect your younger relatives to have personal finance required in college the same way that English and Math are now.

Matthew said...

Dr. Tufte said that we should look for money habits as traits in a spouse. So true! I heard somewhere that 90% of divorces can be traced back to money. I also completely agree that personal finance will someday be required in college. I hope that it's required in high school and elementary school too! All of us need to know how to fill out W-2s, write checks, fill out tax forms, choose a credit card, invest in 401Ks, etc. Sorry, but I don't remember the last time I needed to name all the elements in chemistry's periodic table. Yet, how many kids can do that, but they don't even know how to balance a checkbook? It's so sad and I think it's something this nation needs.

Dr. Tufte said...

Now I'm not so sure this has reached a tipping point. We are 3 years down the road, and if anything there is less buzz about this than there used to be.