($)99 problems
I saw this website, put out by the US President's Advisory Council on Financial Capability, entitled Money As You Grow -- 20 Things Kids Need to Know to Live Financially Smart Lives. In theory this is a great idea; the website is simple and eye-pleasing, the information is presented in small easily understood chunks, but I have some concerns about what they're presenting as need-to-know information, especially for the older ages. For example, yes, technically you shouldn't use a credit card unless you are able to pay it off in full every month. But there are instances when you do actually need to buy something that you can't pay off in a month. My computer broke when I was in college. I needed a new one for my school work, and I didn't make enough money to buy even a not very nice one outright in a month. I feel like teaching kids to never use a credit card is like teaching abstinence only sex education -- they're going to do it eventually, but if you just say no no no, they're not going to know how to do it responsibly.
Also, the website advocates having 3 months living expenses saved by the age of 19. I didn't live an extravagant life when I was 19 by any means, and I worked at an above-minimum-wage job 20+ hours a week, while going to school full time. I wasn't even making enough money per month for living expenses, let alone saving anything; I was getting by on student loans, help from my family, and yes, credit cards. By presenting that as a basic necessary life lesson, it seems to frame people for whom that is not a possibility as failures. I recently came into some money unexpectedly, and I used it to buy a car, which I needed for work, and to pay off a good chunk of my credit card debt. It would have been fiscally irresponsible to just put that money in a savings account to gain at most 2% interest (and probably more like .5%), instead of pay off debt that's got a 18%, or even higher, interest rate. And I haven't even touched on my thousands of dollars of student debt.
I'm disappointed that the US administration seems to be tailoring its advice to people and families that already have money (starting your Roth IRA at 16, really?). I don't know these people that have 3 months living expenses on hand, and that don't need credit cards, and that can start investing as teenagers. I think more useful money lessons would be things like how to know if a credit card is offering you a good rate or not, that late payments mean you'll have to pay more later both on your bills and due to your credit score, how to deduct everything you qualify for from your taxes, or why it's good to pay down debts as fast as possible.
Thoughts?
Originally posted at http://aidenfire.dreamwidth.org/288811.html.
Also, the website advocates having 3 months living expenses saved by the age of 19. I didn't live an extravagant life when I was 19 by any means, and I worked at an above-minimum-wage job 20+ hours a week, while going to school full time. I wasn't even making enough money per month for living expenses, let alone saving anything; I was getting by on student loans, help from my family, and yes, credit cards. By presenting that as a basic necessary life lesson, it seems to frame people for whom that is not a possibility as failures. I recently came into some money unexpectedly, and I used it to buy a car, which I needed for work, and to pay off a good chunk of my credit card debt. It would have been fiscally irresponsible to just put that money in a savings account to gain at most 2% interest (and probably more like .5%), instead of pay off debt that's got a 18%, or even higher, interest rate. And I haven't even touched on my thousands of dollars of student debt.
I'm disappointed that the US administration seems to be tailoring its advice to people and families that already have money (starting your Roth IRA at 16, really?). I don't know these people that have 3 months living expenses on hand, and that don't need credit cards, and that can start investing as teenagers. I think more useful money lessons would be things like how to know if a credit card is offering you a good rate or not, that late payments mean you'll have to pay more later both on your bills and due to your credit score, how to deduct everything you qualify for from your taxes, or why it's good to pay down debts as fast as possible.
Thoughts?
Originally posted at http://aidenfire.dreamwidth.org/288811.html.