Financial Literacy: Get Nosy

A guest blog by Chloe Siamof – Freshman, Yale University

I see you reading the term, “financial literacy” and already expecting a lecture similar to one in a personal financial management class where you learn to balance a checkbook. You’re already rolling your eyes, but WAIT!! Because financial literacy is just a fancy way of talking about everyone’s favorite thing…MONEY.

The educational definition of financial literacy goes something like this:Met

“Financial literacy can be defined as the ability to understand, to evaluate, and communicate information about money and financial services. This includes
the selection of appropriate financial options, the ability to plan for the future, and the capability to respond to life events and their effect on personal finances.”

But honestly, it is much simpler to understand money when you approach it from a four year old view and use the only resource you have: your parents. During my senior year, I took an economics course that taught me a few things, but one homework assignment in particular made me realize I might have unrealistic monetary expectations. It was a hypothetical budget based on the average starting salary of my future job as an architect. In this exercise, I had to determine what portion of my salary would be designated to my mortgage, food, car payment, etc. I wrote what I thought were reasonable numbers and ran it by my parents before submitting the assignment They laughed.

But it’s okay, because I then proceeded to grill them about how much they pay for utilities, property taxes, auto insurance, mortgage, etc. Quickly I realized that my best financial learning resource was right in front of me. Moral of the story: Get nosy (within reason). I have always asked my parents questions about their finances, with the understanding that whatever they tell me is not repeated.

Here are some of the questions I have asked:
What do you earn in a year?
What part of that do you pay in taxes? How much goes into your checking account? Savings account?
What did you pay for the house? What is it worth now? What amount of money did you put down? Do I have a college fund? When did you start it? What is your credit limit? What is a credit score?
What is a 401K and 529 and a Roth IRA? And why is everything in code?! (Just so you know, a 401K is a retirement plan, a 529 a college savings portfolio and a Roth IRA a special type of retirement plan)

In addition, I go on all errands with my mom; as a result, I have realistic expectations for grocery costs, insurance co-pays, etc. Money is an awkward subject, but feel your parents out by asking pretty harmless questions like, how much did dinner cost today? How much did it save vs. going out? Agree to confidentiality and see where it goes. You will be shocked. Especially if you’re a teenager and you want to know the grocery bill.

In the end, if you are applying to colleges, you will have to fill out a FAFSA and/ or CSS profile to determine your financial aid amount. You will know everything about your parent’s finances then. So why wait? When you can learn from them now.

Tags: ,

Comments are closed.