Financial Literacy: Are We Teaching the Right Things at the Right Time?
“Money management isn’t taught in schools,” goes the complaint. “That’s the reason people don’t know how to handle money.”
The thing is…
I don’t know about where you live, but personal finance IS taught in at least some of the schools here. Both my son and I — who went to area public schools — had instruction on things like budgeting, paying bills, writing checks, balancing a checkbook, and depositing and withdrawing money. In both of our cases, the personal finance-related things were taught somewhere around 6th & 7th grade.
Yet shortly after I went out on my own as an adult, I began to have problems managing money in the real world. It was easy when most of my money was available for spending — you know, when I was only working to pay for my car expenses and “fun stuff”. But it wasn’t so easy once I needed to pay for everything.
I knew I needed help, but didn’t know where to get it. Now of course, I’d probably just search the internet, but at the time I checked the library and the phone book, and came up short. It didn’t help that I thought my problem was that I didn’t have enough money to manage, instead of realizing that the real problem was being overextended.
I’d write out the budget every month, and it would all work out just fine. It actually came out pretty even in reality too, at least at first, because I just stopped spending when I ran out of money, even if I still needed or wanted things. But that kind of sucked.
Looking back, all of that makes me wonder if we aren’t focusing on the wrong things at the right time when we try to teach financial literacy. Sure, the mechanics are important. People do need to know how to deposit and withdraw money, make a budget, etc.
But kids that age don’t usually have a job, and aren’t responsible for paying for much of anything if they do earn money. So there’s no real cause and effect — just another lesson that seems unrelated to real life. I think it might be better to do it during the late high school years, since that’s a time when kids are likely to be out earning their own money and wanting to buy things.
I think we also need to be teaching about the dangers of debt and the benefits of patience — along with tips on how to plan for the future starting right now. Imagine if you’d put away even 5% of everything you ever made, starting as a teenager… We need to emphasis leaving wiggle room too, and point out that things rarely go exactly as planned, and that emergencies are a fact of life.
What do you think? Did you learn about money in school as a kid?