Teaching Basic Money Skills for the Greater Good

financial_educationIf you’re reading this right now, you most likely have some interest in personal finance.   Everyone coming here to Squirrelers probably cares about money in some way, shape, or form.  Along those lines, there is probably at least a basic level of personal finance knowledge that many people have when reading posts here or on other personal finance blogs.  Some of you go well beyond that, and might fall into the “expert” category.

Sometimes it’s a good idea to stop and think about this for a moment, while realizing that there is probably a staggering number of people out there with zero knowledge of money or how to handle it.   One thing that reminded me of this reality is a study showing that many people don’t know with whom the U.S. fought for independence in the 1700s.  Sure, that’s not exactly a topic within the personal finance sphere, but it jumps out as an example of how basic knowledge can be missing in so many people.

1 in 4 people apparently did not know that the U.S. obtained independence from Great Britain.  Some people were unsure, and others even thought the U.S. broke off from places such as France, China, and Mexico.  Seriously.  And yes, these were actual U.S. residents surveyed.

I mean, if that’s the case, you can be sure that there are a ton of people with even less knowledge of money!

Here are some concepts that might be missing from the knowledge base of such folks:

  • The reason to have one’s expenses be less than income
  • Why a person shouldn’t automatically take on the maximum home loan for which he or she is approved
  • The difference between wants and needs
  • What rate of return is
  • What stocks and index funds are
  • Why saving for retirement is important
  • Why social security, “the system”, or anybody else won’t be there to automatically take care of you when you’re old
  • Why carrying credit card balances can be so bad

Not making fun of anybody, but just realistically saying that there have got to be plenty of people who simply just don’t understand the basics with money.  If there are people thinking that the U.S. declared independence from France, China, or Mexico, you can be sure that there are people who think credit cards are a source of free money.  Or something similar.

What’s alarming about this is that grown-ups with such knowledge (or lack of it) are actually advising their kids on careers and whether or not to go to college.  While education can lead to wealth, going to the wrong school with high expenses and low ROI compared to cheaper alternatives could saddle a kid with massive student loan debt when young.

The blind leading the blind?

Anyway, where this all leads me is to the idea that there really should be a lot more basic financial education in schools.  As in, starting at a young age.  If we’re teaching history in school and 25% don’t retain basic historical facts, then you can bet that a far greater percentage don’t know money basics since those aren’t as much of a focus academically.

Actually, if we could get it to where only 25% of people don’t know simple financial concepts but 75% do, that would probably be a huge improvement.  All that collective financial savvy could help a country make good financial decisions as well, including operating on a balanced budget and avoiding national debt.  Keep going at our current rate, and we’ll have to fight for independence once again – this time financial independence.

So, for the greater good, here’s to teaching kids about money at a young age!

My Questions for You

What are your thoughts on personal finance basics being taught in schools?

Do you think that those of who read (or own) personal finance blogs sometimes lose sight of just how many people out there don’t understand simple money concepts?

As a side question, what do you think about those findings about knowledge of U.S. history?

 

Comments

  1. says

    Considering the quality of people American voters repeatedly choose to run the country, a revelation of these folks’ willful ignorance is sadly unsurprising! :-)

    Seems pretty clear that there’s a woeful lack of personal finance knowledge among consumers. I’d very much be in favor of the basics being added to high school curriculum, especially since Mom & Dad are likely, based on national debt and savings statistics, setting a poor example!

    • Squirrelers says

      Kurt – yes, your last point is exactly what I’m thinking. Many parents who dish out advice aren’t financially literate themselves.

  2. says

    Great Post. I’m not surprised about the general knowledge of U.S. history, sadden, but not surprised.

    I am totally on board with teaching personal finance basics in school. I’m teaching it in my home and so wish my parents did when I was young.

    I think you have 2 types of people that read PF blogs, one person who is looking to increase their knowledge that’s why I started reading them a few years back and the second the ones that are pretty knowledgeable already. I think owners are looking to education others on the information the have found and have been successful with.

  3. says

    I didn’t get any financial education in high school at all so anyone who has anything did better than I did. However, I often forget so many people have no clue about what of the majority of people on financial blogs talk about.

    • Squirrelers says

      Lance – I know, sometimes I forget this too. Knowledge is power, and realistically many do have it but a lot of people have almost none when it comes to money.

  4. says

    I would be very happy if Personal Finance were taught in middle school and high school. The Treasury Department actually paid the University of Missouri to put together a 4-lesson curriculum for middle schoolers. It’s called Money Math: Lessons for Life. You can find it on the TreasuryDirect website. I bet you never heard of it. That’s the problem. How do we get the word out? And how do we get it taught?

    You can download the lessons from the links in the middle of the web page. Now we just need to push the teachers to teach this stuff.

  5. says

    I think it really is the right time to teach financial lessons in school. Too many college graduates are having a hard time managing their finances and filing for bankruptcy. If they don’t start now, I don’t think the future would be better.

    • Squirrelers says

      Yes, it’s hard for people to make massive financial decisions like getting an education without some basic financial knowledge.

    • Squirrelers says

      Good question, but it wouldn’t surprise me if many of those people living here and believing those things actually grew up here too.

  6. says

    Most kids think they know it all – and would they listen anyway.
    Until they have the resonsibility of an income, bills and managing their own money would they find personal finance classes yet another irrelevant class at school ??
    Maybe a few might benefit but not the majority.

    • Squirrelers says

      Always possible, not a bad point. But people can absorb things from classes even if they don’t like them or pay only half attention!

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