If you are under the age of 18 there is a 97% chance you are terrible with money. I actually made that statistic up just now but I can’t imagine it is that far-fetched. My school either taught me nothing about PF (personal finance) or I slept way too much in economics class. I’m pretty sure it was the first option though because I remember all the talk about widgets and profit margins etc. I have no recollection, however, of learning about compound interest, balancing a checkbook, credit scores, and passive income. Personal finance education is something that our schools need to embrace immediately. If children are our future then our future depends on it. And even if your kid isn’t one of the fake 97% they could still use some practical personal finance teaching, right?
Most people learn PF through the school of hard knocks. Either a credit card balance gets out of hand or you accidentally overdraw your checking account. Maybe you bought a home or car that you couldn’t afford. Then you spend the next 6 months to 12 years paying for that mistake. That sucks. Wouldn’t it have been nice if you had at least developed a greater understanding of the financial world you would be stepping into once you left high school? It might have motivated you to choose a cheaper college or grab a part time job to incur less loan debt.
I think so, which is why I propose that middle schools and high schools make a personal finance class MANDATORY for every student. No graduating and moving on unless you have learned about tax rates, car depreciation, and using a credit card wisely. Wouldn’t that make the whole world just a little bit easier to navigate? It certainly wouldn’t prevent these kids from growing up to trash their credit and make incredibly risky and life altering financial moves, but, it would alter the landscape of personal finance knowledge in our country. I have to imagine it would make a pretty big dent in the steel wall of financial illiteracy that plagues our citizens.
Since personal finance classes aren’t currently offered in a majority of school systems we as parents need to make sure our kids are properly equipped. Consumer expert Clark Howard wrote a book to help you teach your children about money complete with worksheets. Check something like that out and open up the conversation. Starting your kid out early with a great PF education could be the key to their future success.
The Consumer Financial Protection Bureau says, “Young people are not prepared to manage their finances when they reach adulthood. At the same time, the current financial services marketplace is increasingly complex. In the face of this very real need, American education should include approaches to teach young people about their finances. Part of that task starts at home. But young people spend the majority of their time in school. Therefore, it makes sense to offer financial education early and consistently throughout the K-12 school years.” I agree wholeheartedly.
I’ll step off my soapbox now. Just know that it bums me out that kids all over this nation are stumbling into credit card debt and ill-advised new car purchases without the benefit of a little financial training. Maybe we as grown-ups (or somewhere close to that) should speak up and teach our kids how to handle money well, and hopefully influence our local schools to shoulder a bit of the burden too. Just a thought.
What are you doing to make sure your kids know how to handle money in the future?
I took Economics as an elective in high school back in the 80s. It, and keyboarding (called “typing” back then), are 2 of the most practical classes I have ever taken. I still do my own taxes–one of many skills we learned. And I still remember her saying, “Do not count on Social Security being there by the time you retire! If it is, then bonus–but make other plans.”
The social security (or lack thereof) factor should make it even more important that we teach PF in our schools. We need to educate our kids about retirement accounts and the time value of money. Investing early and often is so important even if it doesn’t seem like a lot of money.
My daughter’s high school implemented a program by I believe Dave Ramsey a couple of years ago. She recently paid cash to buy a decent used car reserving money for repairs and insurance. She had salesmen who tried to talk her (at age 18) into going into debt by using her money as a downpayment and getting a loan to be able to afford something nicer, but she did her research and test drove a number of different cars before deciding on one within her budget. She learned quite a bit from the class about a myriad of everyday financial decisions. I think a practical class like this is necessary for all students. Ohio is implementing it as mandatory for students who will graduate in 2014 and beyond.
That is great Patricia. Thanks for sharing.
My high school did offer a personal finance class. I’ll agree it was a fairly practical course.
The tough thing is there is so much everyone believes needs to be included in school curriculum. There is not much room for a specific class. Fine arts and physical activities seem to be pushed out over time. The trick is finding different ways to teach current curriculum with more practical information. Ex: reading assignments to include financial topics to analyse for cause/effect so you’d hear about the woes of fees. At most, create a lower level math class about finance and budgeting for those who aren’t the most comfortable with numbers. Overall teach simple tools to be able to think for themselves when they get approached with a financial choice.
I was active with a STEM related non-profit in my past. Part of our outreach was working with current teachers to create lessons (or experiments) that were more engaging, at a low/no cost that included current curriculum topics. Also show the end result of mastering the topic can be exciting.
Hey Sara,
You are right. There are lots of different courses that people believe to be important. Maybe we should just make PF education a part of our economics class. I’m not sure what the best method is but I do know that we are sorely lacking good teaching on that topic. And its a pretty important one.
The National Endowment for Financial Education was founded to help with that. Unfortunately it is only a group that offers curriculum materials and support. They have not pushed for required personal finance classes in all education.
As a parent it was the most disappointing part of my sons’ educations. Most of the kids I see don’t understand how to pick out a good bank that can service them, how they can get a bad credit score, nor how to earn a good one. They struggle through Chemistry, Physics, and Calculus, but can’t do basic accounting and finance to keep up with their student checking accounts and college loans. They sign where they are told and ask questions later. No one is telling them to read the fine print and why it’s important. No wonder we see so many more foreclosures in the younger demographic.
Thanks for weighing in Dawn. It is a bummer to see kids learning such advanced things that they often won’t use again but not learning the basics that they’ll use EVERY DAY for the rest of their lives.
I actually think I was one of the fake 3% in highschool. I had a job starting at 15 so I was always hawking my finances, making sure I knew where every cent was. Then college made me dumb. Too much booze seems to have killed off the personal finance buffalos, as my earlier 3% self went into the 97% category. Working hard on getting back into the good side of this fake statistic.
Thanks for your honesty potato head. Good luck on your mission towards the good side. Man I love fake statistics. From looking at your site you seem like a Craiglist guru. Nice! I think I might name my firstborn Craig bc I love Craigslist so much.
It’s risky. There comes a line where the teacher comes close to giving financial advice. Heck even at Fidelity we basically can’t tell people what is smart and what is dumb in terms of their financial decisions.
That is true Mike. It would be a bad idea for teachers to specify stocks to buy and how to time the market. But basic principles of the time value of money, how debt affects you, checking your statements, and how much purchases we make effect us would be really nice. I wish someone had taught me earlier what different retirement accounts entail and how much more financially secure you can be by investing just a few years earlier.
Hey Joel,
I’m sure you’ve already seen this since you’re a vanguard investor yourself, but a little over a year ago they produced a K-12 curriculum to teach personal finance and even investing in the classroom. And they’ve made it FREE to educators. Seems pretty awesome! Their website is http://www.myclassroomeconomy.org/home.html
Hey Nate,
I hadn’t actually heard of Vanguard doing that. Super cool! I’ll make sure my teacher friends know about this for sure. Thanks for sharing!