The Top 5 Money Skills Your Kids Must Master

A massive effort to learn what kids do and do not know about money is set to launch in our nation's schools, and it will center on five broad areas of personal finance. For any parent concerned with teaching their kids about money these "core competencies," along with some others, make a pretty good focal point:

Â· Income Key issues include understanding gross vs. net pay, taxes, workplace benefits, the cost and value of education and income-producing investments.

Â· Spending Key issues include understanding how to budget, set long- and short-term goals, live within your means and comparison shop.

Â· Saving Key issues include understanding compound interest, federal deposit insurance and tax-advantaged accounts.

Â· Borrowing Key issues include understanding the cost of different loan rates and the adverse impact of a poor credit score.

Â· Managing risk Key issues include understanding insurance, the importance of an emergency fund, and how to evaluate TV commercials, avoid scams and protect your identity.

These basic areas will be taught and tested in schools between March 7 and April 8 as part of the 2011 National Financial Capability Challenge. This is a truly worthwhile effort. But there is no guarantee that your children will be involved because it is being done on a voluntary basis. Odds are your school is not participating.

Last year, some 1,500 schools took part touching nearly 77,000 students. The numbers should be higher this year, given the growing emphasis on financial education in the wake of the Great Recession. But the program will still reach just a fraction of the target group -- students aged 13-19. There are some 16 million kids in U.S. high schools alone.

Wouldn't it be great if this nationwide effort were mandatory? That way the program would benefit all students, not just the lucky few who have schools and individual teachers willing to take on this mission.

It's not too late to get your school involved. The program and all materials are online and free. Any educator can sign up. Your school might even let you lead a class if you're so inclined. So call the principal. Let him or her know that you'd like your school to be involved. It's never too late for a good money lesson.

Photo courtesy Flickr user goodncrazy
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Dan Kadlec

Daniel J. Kadlec is an author and journalist whose work appears regularly in Time and Money magazines. He is the former editor of Time’s Generations section, which was written and edited for boomers. Kadlec came to Time from USA Today, where he was the creator and author of the daily column Street Talk, which anchored the newspaper's business coverage. He has co-written three books, including, most recently, With Purpose: Going from Success to Significance in Work and Life. He has won a New York Press Club award and a National Headliner Award for columns on the economy and investing.

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