Every year Financial Literacy Month is celebrated in April. First recognized in 2004, the Financial Literacy Month is more a challenge than a celebration. I honestly did not know this was a thing until I started working on a series of posts related to some fun exercises we do with our children and then I realized, I had to make sure my first post got out in time :)
Financial literacy in schools across the board is abysmal…and sadly as a backstop, many parents don’t have the faintest idea how to teach this stuff to their kids. According to some of the latest stats:
Worldwide, only one-third of adults understand basic financial concepts.
4 in 7 Americans are financially illiterate.
Only 24 percent of millennials understand basic financial topics.
In 2020, states that required high school students to take a personal finance course increased by 24 percent from 2018.
In fact, in 2019, 70 percent of high schoolers in America had the option to take a personal finance course, but only 17 percent of students were required to take one. (Council for Economic Education)
So when it came time to think about our own children and teaching them about money, we wanted it to be fun, inspirational (maybe), over several years as they mature, and across the capital stack.
So in middle school, I start to talk with them at a high level about money, investing, lending, etc and begin simply with them exploring for themselves some ways to be engaged. As they get closer to high school graduation, we’ll ratchet up the technical side of things but for now, it’s fun and experiential. As I explored a way to make this engaging and educational, I started with people I knew…and, one of my dear friends is Jonny Price. We have now known each other for about 8 years. We first met via Twitter when he was the founder of KivaZip (the predecessor to KivaUS) as an internal project at Kiva to bring true peer-to-peer lending to small businesses across the United States.
At the time, KivaZip was expanding via a community strategy but parachuting in Kiva Fellows like they had done in emerging markets to work with MicroFinance Institutions (MFIs). In 2014, we had just kicked off a new part of Access Ventures around access to capital and saw small business lending and the retraction of banks from these borrowers as alarming and something that needed to change. Low and behold, we convinced Jonny to let us send HIM our own fellow - believing that a local person would have more credibility in conversations than an outsider and that this would lead to faster expansion of the platform. It worked! And over the next three years (until Jonny’s departure from Kiva) we were there “go to” partners in helping communities launch strategies and helped Columbus, OH and Tulsa, OK launch Kiva Cities! In the end, we drafted a playbook through my Rubinger Fellowship at LISC and open-sourced it because the power of peer-lending and the ability to support 125+ businesses and leverage over $1M for small businesses in three years was powerful!
Personally, my wife and I made a commitment to lend to every borrower within any geography we were working…literally putting our own money where our proverbial mouths were. And it was amazing to see the types and amount of borrowers we were able to support! We took $1,120 and were able to loan $2,600 over several years to support 109 entrepreneur dreams!
What a great resource to teach children about business as well as lending. So for our first exercise, I talk with them about microlending and walk them through Kiva and setup an account with them. Then I say…I’ll give you $50 to make two $25 loans to any entrepreneur you like…I only ask two things: 1) tell me why you chose them - what was it about them, their story and/or their business that led you to want to lend to them; and, 2) to follow their progress and re-lend every time your balance is back to $25. It’s a fun way to learn their interests, to talk about different cultures and businesses, as well as for them to learn about the power of peer-lending. And now after about a year, my oldest has now relent her money and is on her way to even more connections with borrowers…who knows where this might take her over the years.
Next time… our next exercise with Wefunder - and the power of community rounds and opportunity to teach our children about venture investing.