Some staunch proponents continue to insist that our children need to be taught the birds and bees in our schools, but you rarely hear a fiscal conservative make their case for financial lessons. New studies released give our schools a failing grade when it comes to teaching children about personal finance. Believing that we were all born with fiscal responsibility and the knowledge of budgeting and saving, learning to be financially secure is being trumped by being encouraged to abstain from intercourse or to wear a condom.
Personal finance is not something that comes naturally for everyone. We all know that kid who, if given a dollar, will hide it away for years. Most of us, however, will find that dollar burning a hole in our pocket. Without the right teaching and guidance, there is no reason to hold onto that dollar. We are entering a time in our history where children no longer understand the importance of saving for their financial future, extending themselves too much, or moderation in general. Not teaching them to take control of their financial future, we may be failing them in the worst way possible.
Over the past two years, there has been a sharp decline in high schools who are requiring students take an economics class to graduate. Personal finance is also something that isn’t being fostered or encouraged either. Nationwide, The Council for Economic Education has found that only twenty states currently have any mandate about economics and personal finance at a secondary level. That is two less than just one year ago. Likewise, only 16 states require that students know the basics of economics when tested to complete their high school degree.
The only saving grace may be that there is more education being taught in the lower grades. As many as 21 states have lessons incorporated in their k-12 programs. Teaching them young may help, but likely, by the time they are in a position to manage their own loans and financial affairs, much that was taught before will be nothing more than a forgotten memory. In addition, with no standardization of what personal finance actually entails, or how it is even defined, those statistics are shaky at best.
Since not every child is going to have to know the complexity of economics, it is unrealistic that they should have a grasp of things in the economy that may not relate to them. Since, however, no one can survive in America without things like a bank account or a credit card, the fundamentals of them should be taught in the mainstream school system. With growing debt rising among our youth populations, and credit card companies targeting them for revolving credit card allowances, it is imperative that we do something to help them with their financial security for the future by giving them the tools needed to do the basics of their own financials.
To many, it seems like a simple concept, you borrow money, you pay it back. If, however, you don’t understand the concept of payments, how much you will eventually owe, or things like interest rates, then you aren’t likely to do well once you graduate and are out on your own. A good example would be the mortgage crisis of late 2009. Many lost their homes because they didn’t have a grasp of the fact that they were living beyond their means, and were overextending themselves. When a lender said that it was doable, they likely thought it was.
Not many students understand the importance of a credit score or what it does for your financial future. If schools don’t give them the tools to know how to navigate their finances for the future, shame on them. You can’t expect kids to know things they have not been taught, and we are leaving huge gaps in their education by not including those things they are going to need.
It isn’t just about simple math; it is about complex questions such as interest, payment schedules, and revolving credit balances that will likely trip our kids up. If we want them to have a secure future, we need to give them the tools they need to succeed. That starts with teaching them financial basics.