What’s the difference between a debit and a credit? Do you know how compound interest works? Do you have (and stick to) a monthly budget?
All of these are things that a basic personal finance class will teach you, but many of us have never taken one (and neither have our kids). This stuff isn’t rocket science. But if we don’t learn at least the basics early on, we’ll likely have big problems later. So why isn’t personal finance being taught in schools anymore?
Here are Five Fast Facts about personal finance education:
- ❓❗ The Problem - Let’s begin with the problem: poor money management! A recent study graded all states on how they prepared students in personal finance, and only 17 got an A or B. The average amount of student debt coming out of college has risen 60% since 2004, from $18k to almost $30k! The average American renter aged 18-24 overspends by $100 each month, and over a quarter fail to pay their bills on time. The average amount of debt for American adults is a whopping $96k. Apparently, we start out badly and go downhill from there!
- 💵 What Is It - Teaching personal finance means teaching the basics of money management, including saving, budgeting, saving, investing, and more. It helps students start building good money habits from a young age that they’ll use for the rest of their lives to make good money decisions. Or at least they’ll know what good money decisions are…
- 🤦♂️ Where Did We Go Wrong? - For one thing, it’s a failure of the education system to identify personal finance as a necessary skill. The recent focus on STEM subjects and standardized testing has pushed schools toward English, science, and math. Recent emphasis on non-academic social issues doesn’t help, either. Also, state bureaucracies tend to get in the way of landing on a good curriculum, and many teachers don’t feel comfortable teaching the subject anyway. Hm, that’s quite a cascade of problems. 😣
- 🤔⚒️ Where Do We Go From Here? - The good news is that it’s finally being recognized as a real problem. Currently only a handful of states require personal finance classes in high school, but 37 more states have legislation in process this year to address the subject. In 2009, only 10% of teachers felt confident to teach it, but now, due to efforts to better prepare teachers, 70% are ready to go. Free resources are also being created by banks, non-profits, credit card companies, and other financial institutions. So there are efforts underway to fix the problem!
- 💡 Does It Work? - Yes! One recent survey shows almost ⅔ of high school students who had taken a personal finance class were already earning $3k per year and had a monthly budget. Twenty percent already owned a car they paid for! Future CEOs? We think so!
🔥Bottom line: So take heart, fellow Americans! We’re in a bit of a pickle now, but there are plenty of things we can do to get out of it. Help is around the corner when it comes to our students learning how to manage their money. This can only be a positive in terms of Paychecks - both theirs and ours!
How did you learn about personal finance?
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