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Money-smart kids: how to teach financial literacy

I've often written about what seems to work when it comes to financial education. In my experience, based on observations and conversations over the years with students, teachers, parents and academics, it's best to start with small, age-appropriate lessons that can be slipped unobtrusively into the curriculum.

Now there's research that shows this approach is also effective. In a survey of teenagers in 18 countries by the Programme for International Student Assessment, results showed that students in the U.S. scored appreciably higher if they simply had a bank account.

I conducted my own mini survey with two young friends of mine, twin sisters Laura and Amanda. The girls recently completed a required course in personal finance, and we discussed what they liked (and didn't like) about the class.

Classes should be practical. In one of the girls' favorite exercises, they were asked to role play and plan a budget that included housing, transportation and everyday expenses. This kind of reality game is always a hit with kids -- and a revelation. "It's a bit of a wake-up call," says Amanda. "You can't just spend your money on clothes and iPhones."

Teachers should be comfortable in the role. Laura and Amanda took their course online, which they preferred because they could move at their own pace without distractions. But they missed having a teacher they could consult. "A creative teacher could have done a lot," says Laura. School districts can address that by taking advantage of free teacher training programs, such as the JumpStart Teacher Training Alliance, a collaboration that's administered by the JumpStart Coalition for Personal Financial Literacy.

Classes should be fun and interactive. If the course hadn't been required, Laura and Amanda think few students would have taken it. "'Personal Finance and Economics' sounds a little daunting," says Amanda. Calling the class "Your Money" might have attracted more interest.

So would a more interactive or game-based program, such as the Council for Economic Education's Gen i Revolution ( or the graphics-rich, six-hour financial literacy course from EverFi ( When I asked Laura and Amanda to take a look at EverFi's sample video, their reaction was, "Wow. This looks way more engaging than our course."

Fortunately, the girls felt comfortable going to their parents with questions, which generated dinner-table discussions about such things as managing credit and investing in stocks. But not every parent feels at ease with those topics. "For the typical kid, this class is probably a good thing," says the twins' mom.

(Janet Bodnar is editor of Kiplinger's Personal Finance magazine. Send your questions and comments to And for more on this and similar money topics, visit

(c) 2014 Kiplinger's Personal Finance; Distributed by Tribune Content Agency, LLC.

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