Thursday, July 26, 2007

Teach this stuff in schools!

Why isn't Financial Literacy taught in today's school? This question has been plaguing me since I decided to create Start Money Smart. And many others are asking this same question. There are financial literacy web pages that generate great discussion on the topic. Many people really believe it should be a priority when educating our young people. So why hasn’t it happened? Why isn’t personal finance added to standard curriculums in American schools systems?

Well, I’ve done some research, and here’s what I’ve found…

1. Teens don’t need to know personal finance to go to college! Standard curriculums in schools are already filled with what kids are required to learn. Many schools will tell you there is no room for additional topics. Schools are under great pressure to generate students who are considered “educated”, which really means “prepared for college”. It doesn’t mean “prepared for life”. If it’s not on the MCAS test or an SAT exam, there’s not a lot of justification for teaching the topic in today’s public school system. And the truth is kids don’t need to know personal finance to go to college. However, they’re inundated with credit card applications when they arrive, and given no education on how to deal with them.

2. Our “money” world is changing too fast. If you’re old enough think back and remember what money was like thirty years ago. Credit cards and charge cards were only for the rich. A 25% interest rate on a credit card was considered loan-sharking. Did anyone ever hear of automatic deduction? What about twenty years ago? There were ATM cards, but no debit cards and no one did on-line banking. Okay, so ten years ago? Well, there were very few pre-paid debit cards, and kids were not running up their parent’s phone bill by texting their friends.
Our money world is changing too fast, and we haven’t been able to keep up with educating ourselves on how to handle it. So for those people who still think, it’s up to the parents to educate their kids on personal finance – I’ll argue that most parents don’t know what to teach their children. They haven’t learned the rules themselves yet.

3. We still believe more money will provide the knowledge. I believe our biggest problem with making a change to our educational system is getting over the idea that “If we just make more money, it’ll be okay.” Some of us are working so hard to educate our youth, and to what end? So they can go to good colleges, and get good jobs, and make good salaries. We still believe that if our kids make enough money, they’ll be okay. They’ll some how learn how to balance that checking account. They won’t buy things they can’t afford, because they’ll magically know how to create a budget for themselves. They’ll figure out taxes and what they need to do to pay their bills on time every month.

If we really want to make a difference in increasing financial literacy in America, we have to let go of the idea that being rich solves problems. In many cases it just creates the need for more education.

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