Could Personal Finance Classes & Training Save our Country?
In my entire public school education and as a citizen of the country, I was only taught how to do two things that were somewhat related to personal finance.
1. How to balance a checkbook. Ironically, this was taught to me when I was in third or fourth grade. How many 10 year-olds have a checking account? Of those that do, how often do they need to balance them? I’m not sure how this lesson was supposed to stay fresh during the 8 years in between when it was taught and most people actually begin to manage a checkbook.
2. The second experience I had with a personal finance topic was during a freshman ‘intro to business’ class I had in high school. For the class, we each picked a few stocks to track over the semester. I remember that there wasn’t any real valuation analysis going on, just some random stock picking. Most of the students went with the bing brand names out there that they actually had personal experience with – Coke, McDonalds, Wal Mart. Now that I think about it, had you bought those stocks back then and held onto them, you probably would have significantly outperformed the market.
Later, in college, I took a Finance course as part of business major that I graduated with. It was more of a corporate finance class than personal. Also, it was part of my major’s curriculum versus a required course.
Years later, I look back on this lack of a personal finance education as a potential root of the financial problems we are now facing. Here are the seven topics that I wish I was taught in high school and I think the entire country would benefit from if taught on a mass scale.
The 7 Personal Finance Topics that could Save our Country
1. Budgeting 101
This includes everything from how to create a budget to cash flow, savings within a budget, and how to maximize net income. Truly a shame that this is never taught – and it’s a huge reason why, as citizens of this nation, we have struggled so greatly to stay out of debt.
2. ROI for Various Post-Secondary Degrees
I had no clue what major to declare or what I wanted to be upon high school graduation. A little more information into the earnings potential of different professions and post-secondary degrees would have been extremely helpful.
3. How to Build a Healthy Credit History
Perhaps this knowledge would prevent college students from avoiding all of the credit card sign-ups to get a free t-shirt or beach towel from the guy standing on the corner before a football game. It usually takes years of strong history to build a good credit rating and the decisions you make early on have significant long-term consequences. How many people in this country know absolutely nothing about credit history and credit scores? I’m guessing it’s a large majority.
4. Home Ownership 101
It would have been great to learn about the costs and benefits of home ownership versus renting, what are mortgages, what are the expenses involved in home ownership, what kind of things should you look for in a home and so on.
5. Finances & Career 101
Topics in this area include how to get experience in and after college, how to build a resume, how to interview, how to negotiate salary, how to build transferable skills, and much more. This would have been immediately applicable to those who went straight into the workforce vs. college entrants, and food for thought for the college crowd.
6. Frugality 101
Anything and everything surrounding how to save money in all aspects of life.
7. Saving for Tomorrow
401k’s, IRA’s, annuities, savings, investing, Social Security, and so on. Perhaps this would lead to much fewer people being completely reliant on government money in the golden years of their lives.
Why Isn’t a Personal Finance Taught in School and in our Society?
Perhaps public school curriculum has changed since I graduated. If any teachers read this blog, I’d love to hear your thoughts on why personal finance is not taught in our schools. My conspiracy theory thought for the day is that the Department of Education has been lobbied to leave personal finance out of education because the decision makers in government know that the American economy has been completely driven through consumer spending and debt. If that’s the case, is it any wonder why we’re in the situation we’re in right now? It’s time for the nation to step up and provide personal finance basics teachings to everyone.
Update: I recently reviewed new data that casts doubt on whether personal finance should be taught in school.
Personal Finance in Education Discussion:
- What personal finance topics do you wish you were taught in school?
- What did you actually learn in school about personal finance?
- What teaching could get the nation back on the right track?
Really hit the nail on the head. I wish there was a way to make financial teachings mandatory for everyone. For instance, if you want a tax rebate, you need to pass this basic personal finance exam based on materials that we provide to you. That would be great.
I would defnitely have taken some of those classes if they were offered!
Really a nice article. I think every school & college going student should read this article. I completely agree with you that the personal finance lessons should be thaught in the schools.
I’m not a teacher, but I know some people argue that finance shouldn’t be taught in schools because it is a personal issue and should be left to parents. Obviously this is a self-perpetuating problem, in that clueless parents have nothing to teach children, so they will never learn.
There are PF classes at some colleges. My friend at Pomona took one.
While I definitely agree that this curriculum should be taught in school, it’s also the responsibility of every parent to ensure that their child understands how to manage their finances.
We can’t always place the blame on the education system, any person with a local library or Internet connection has more than enough information at their disposal.
Any more financial life experiences would have been nice. About credit scores, financing, interest rates, how to save best for retirement. Those would have been nice to learn before hand instead of now as I go through it.
Bravo. I couldn’t agree more. We’re basically shooting our future down by not instilling basic financial literacy in high school. This is probably one of my favorite posts here so far!
I am a teacher and I want to know when schools became responsible for teaching everyone everything. We already have way too much on our plates because of standards and testing and No Child Left Behind. Besides teaching students what happens and them actually doing it are two different things. For example we teach health and healthy eating, yet we are still producing over weight kids.
Not everything. Just the essentials of an education. :)
@Kelli – Certainly the schools are jerked around a lot, but there are three real life topics that I think we all could have benefited from in school: real physical health (eating healthy, exercise, etc.), mental health (confidence, spirituality, social skills), and personal finance. It could be argued that the large majority of the nation’s problems stem from a lack of education in these three areas. These are the basic essentials of a healthy life, yet we push them off to the side. Parents should definitely take an active part and shouldn’t be off the hook either – but if they aren’t proficient in these three areas (because they never got the education), then it leaves the children out to dry.
I wonder if they’re not taught because since so many parents ARE clueless (in all three of the areas mentioned in the comments) we would be in essence giving students/children tools with which to criticize their parents. It’s like the non-QWERTY keyboards that are faster or why we don’t switch to kilometers and celsius like the rest of the world – the functioning adults now don’t want to be the ones that are behind, so we continue to leave our kids behind. Argh. I am lucky because my parents never had any debt beyond a mortgage, and ever since my mom passed away my dad has been a debt-free renter, so he hasn’t even been super affected by the decline in the housing market. They weren’t great savers, either, but then again I think my dad (like many his age, early sixties) wouldn’t retire for anything. I don’t think he would know what to do with himself.
To Kelly – you teach “healthy eating” and the the school has a pop and candy machine around every corner.
Execllent article. I remember in high school taking one of those “life skills” classes and the only financial skill I remember learning is how to balance a checkbook. I was taught as a child the idea of frugality. Probably not by choice but I learned a great lesson, none-the-less.
I think the seven you mention are dead-on and would greatly benefit this country. I agree with the idea that people just don’t (or don’t want to) know about their money. I know a lot of people that hate to think about money – the whole “if you don’t think about it, it can’t bother you” mentality. If we teach financial responsibility, this way of thinking would be eliminated.
I agree with many others that finance should be the responsibility of the parents.
That being said, I work in res life at a residential high school, and I make sure to include bulletin boards or other programs about personal finance, including some basic terminology, balancing a checkbook, how interest works, etc. – when these students are on their own in college, I know that many of them will have no clue what to expect financially. I’ve also bought a few personal finance books for the common areas of the hall, hoping students will look through them.
I think for most schools, practical classes about the real world have been brushed aside for increasing numbers of high-level math and science classes, as well as other college prep courses. My mother has been in education for over 20 years, and in the past two decades, standards have increased to the point where already in the students’ 6-hour schedule, recesses have been shortened, naptime has been cut out for kindergarteners, and students have less free time to devote to anything other than very specific, state-required studies. In high schools, most vocational, personal finance, and home economics programs have been cut because there are too many requirements students must satisfy elsewhere.
I think Kelly’s statement does beg the question: what *are* parents required to teach their children these days? Schools are responsible for all the maths, sciences, histories, languages, arts. We are increasingly expecting schools to not only teach, but enforce best practices for health, personal hygiene, values, social skills, good mental health, personal finance, etc. Where is the time for this between the hours of 8 and 3? And how much of this alleviates parents of their own responsibilities to their children?
I think we have to stop expecting schools to raise our children for us.
@ Katie – I don’t want to absolve parents from the responsibility of raising their children – but hasn’t our capitalistic society with it’s shrinking middle class created an environment that begets our public schools from teaching our children essential life skills? Let’s face it, how many stay-at-home parents are there anymore? It’s more and more difficult to raise a family on one income. For those who can afford it, they’ve probably are sending their kids along to private schools. You can put all the responsibility in the hands of parents, but how many parents out there are smart enough, responsible enough, and have enough time to do it right?? This system has failed miserably. One may argue that these parents shouldn’t have kids then. I wouldn’t disagree with that point. I don’t plan on having kids until I know that either me or my wife can stay at home and raise them the right way.
I AM a teacher and a teacher of those practical arts classes that another poster spoke of. They are right when they say that classes like mine are being pushed aside for higher level math and science courses. And to what end? I don’t know really. I do know that what I teach are the things that EVERYONE needs.. be it budgeting, healthy food prepartion, parenting and child development (which I think should be a required course for graduation). I understand that many on here feel that personal finance should be just that, personal and taught by family. It is not strictly someone’s opinion though. There are tried and true methods for having money to do the things you want to do, while still saving for the future. Not to get into the politics of it, when the government acts as big brother and subsidizes the basic necessities of life for so many people, we remove the motivation for improving one’s lot in life. Why learn about budgeting so that I can afford the kind of home/car/lifestyle I want when I can get the govt. to pay for some of those things for me? I hope this makes sense to someone out there. I am writing a research proposal on whether or not using personal finance or budgeting simulations to middle school students changes attitudes and perceptions about $$ management. It is not so much that people don’t know about budgeting, its just that people don’t really want to act on it. Immedediate gratification vs. long term…make sense. Most people understand at a very basic level that they can’t spend more than they make, that they need to save for the future, but most people don’t want to do it. Given a choice between chocolate or fruit to eat next week, they will choose fruit, but when given a choice for today, they will choose chocolate. They would rather have that new house and plasma TV and luxury auto today than have to wait until they can really afford it.
AWESOME article!!! The information within is exactly what I think about daily. I cant express myself more profoundly than GE Miller (another commenter-author). He states that most Americans’ problems stem from either physical, financial, and mental disablilities. Personal Finance ought to be a graduation requirement. I am glad to see that young people are realizing the importance of personal finance as this will aid in our country’s economic recovery. Also, I agree that one parent should be at home to raise the child(ren) until the child(ren) are mentally grounded in good social and spiritual skills which in turns makes a more CONFIDENT person.
This is a great article. As I was reading through the numbers, I couldn’t help but think, “Hey, my mom taught me (at least a little) about that”. I may have heard a sentence or two about a few in school, but not as much as I know this country needs. Thanks for bringing this out. I’ll be forwarding the post to my family and friends.
There are classes now a days that you can take for personal finance