Financial Literacy Is Having a Moment

Climbing out of poverty, or avoiding it altogether, has two components: 1.) making enough money and 2.) managing it well. It's no doubt that with salaries dropping and unemployment remaining stubbornly high, people aren't making enough. But they're not managing it well, either. How else to explain the lottery winners who find themselves broke again in a couple years? Here's three last words for any doubters: M C Hammer.

So the swelling ranks of those in poverty is no surprise. We can't singlehandedly negotiate salaries, so how can we increase financial literacy starting at young ages? It's tough, especially in a time when taking on more debt is the only way for many to stay afloat and even colleges are selling out their naive students to greedy credit card companies.

Middle School 223, the Lab School of Finance and Technology in the Bronx, is an inspiration.

The principal calls financial literacy "the fourth R." The school runs an in-school bank. Student earn "school bucks" for good behavior and strong academics. Then they can use them to buy goods, like books and flash drives, from the school store. (Inventory comes from donors.) Entry to a school dance costs 30 bucks. Students learn budgeting, but that's not all; when students opt to save their bucks in the bank, they earn 10 percent interest. Student "employees" earn bucks for each hour they work. The goal is teaching kids, mostly black and Hispanic, delayed gratification.

While we'd like to see financial literacy courses like this take their rightful places in this country's public schools and universities, until that happens, it's nice to see entrepreneurs in the private sector stepping up. Check out these other new ways to teach kids how to manage money, in the hopes that they'll be responsible, financially comfortable adults.

FamZoo, just started by a father of five, lets families manage their own virtual banks with each child having an account. The site says it can help parents start teaching kids as young as four the value of money. Older children learn budgeting techniques through virtual spending, saving and giving trackers. Parents can also manage chore checklists and add money to accounts (paychecks, if you will), when chores are completed.

It's good news for consumers that FamZoo is entering a competitive market. ThreeJars.com, also founded by a father of five, emphasizes savings in virtual accounts designed for kids. A feature that lets them propose chores they can do around the house to make more money breeds future entrepreneurs.

Zefty.com is an allowance manager. The site will estimate, based on household income, age of the child and household responsibility, how much a child should be getting. Allowances are automatically calculated on the computer, so kids and adults alike know how much is due. Money might not change hands until there's a need to spend, but young people learn budgeting all the way. Kids can also print out Zefty checks to give to their parents to get cash, since balancing a checkbook is an alien concept to many young people these days.

So which one do you think would work best? When neither schools nor parents take the opportunity to teach financial literacy, what options are there for kids?

Photo credit: SiSter PhotograPher