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Maybe a bunch of students "plan" on graduating college (and I suspect the ratio will increase over time), but for a long time to come, many students will NOT be completing, or even attending, college.
I don't understand this bias against personal finance in school instruction, when so much of it is basic numeracy. Should we not be teaching our kids math?
If I had had such a class - and my high school had nothing even remotely related - I probably would have been told that going to college was a good "investment" which in my case was the worst financial decision I could have made.
Hazzard: I don't see schools as being *morally* obligated to do anything (morals relate to teaching within a family), but like I said above, basic money management an be covered in 2 weeks in middle school... Don't waste high school students' time with something so basic.
Flipper: I've tried emailing you, because Id like to hear your story, but your email address bounces. I don't think your experiences are indicative of most others'.
Most people need an unbiased explanation/education on the true costs of debt since this seems to be our nation's biggest problem.
I don't think I would have processed and retained this information well in high school because it was not relevant to me at the time.
Some people insist on learning things the hard way. I think lots of PF bloggers can attest to this, myself included.
I'm not the world's dimmest blub, certainly, but I still have very little understanding of the stock market. I always look around me and wonder how everyone else seems to have it so figured out. And Fidelity had to spend a full hour on the phone explaining asset allocation to me just a month ago so I could choose from among their hundreds of funds and investment options.
I suppose I'm confessing that despite my best efforts, I'm still financially retarded. I happen to have made some good investment decisions (i.e. real estate) mostly by happenstance, not as part of any grand plan. And I've had tons of schooling. The worst part is that it can be a huge challenge to find unbiased financial information and advice because so many are eihter trying to sell you something or can't give you the advice you really need.
I had a class very similar to Flexo's home ec class. We went over some basics - how to write a check and balance a checkbook kind of stuff. I'm sure the teach would have liked to cover more. Teachers want to cover more of everything, but like Flexo says, they're too pressed for time as it is.
I think it is perfectly reasonable to include personal finance examples throughout the curriculum, including math and economics classes. I think it is perfectly reasonable to offer a short finance skills program after school, if normal instructional time is taken up with other classes (plenty of schools require extensive outside volunteer work or capstone research projects, and nobody complains). I don't think it is reasonable to say "the lessons of personal finance have no interaction on any other academic subject, so let's make no effort to put it in schools at all."
Well, plenty of people complain, but the majority of parents in those school districts accept that schools are in the business of preparing students to be adults and CITIZENS, not just giving them one more credential on the ladder.
I consider the understanding of money management as crucial in becoming a contributing member of society, and so I think the standard for those classes (along with civics and public health) should be "opt-out via parental request", rather than the reverse.
I hope I've clarified my position.
So while a course in personal finance might be nice, it would require her to drop either an elective she enjoys (e.g. orchestra) or an academically rigorous class (e.g. advanced placement statistics, AP economics, etc)
Moreover, a course in personal finance would have to compete against all the other courses pushed by particular groups (with good reasons)to include in the list of mandatory courses (e.g. physical education, health, drivers education, more foreign language, more math, more english, etc)
I was thinking that maybe having it earlier in school life (in a kind of little and often way) might be better. Anything related to money management that we did at school came in a subject called "Personal, Social and Health Education" where we also did some stuff on nutrition, relationships, bullying, first aid, etc. This class was about an hour a week for 3 years (it did cover a massive bunch of stuff).
•What is a budget?
•What is debt?
•How to file a basic tax form
•What, why, and how are the various deductions taken out of income (e.g. Social Security, Federal Taxes, State Taxes)
•What are property taxes?
•What is life insurance? Medical Insurance?
•What is a secured versus non-secured loan? How much does it cost to pay back a loan?
•What is a bank? What are checks? What is a debit card versus a credit card?
•How are interest rates calculated on credit cards, bank statements, and mortgages?
•What is a credit report and score
These topics absolutely can be taught by a teacher, as with any subject, given the proper training. The course should not be meant to replace professional advice related to tax, investment, estate management, or insurance coverage strategies. It should simply provide understanding of the terminology & mechanics of basic financial topics – the financial ABC’s, if you will.
Flexo commented that Personal Finance should be taught at home, by parents. Unfortunately, financial ignorance can be passed down from generation to generation widening the socio-economic gap between the financially savvy family trees. Personal finance education in high school helps level the playing field by ensuring every adult enters into our economic society knowing the rules of the game. The benefit would be to help mitigate the number of people victimized by predatory lenders, potentially reduce incidents of bankruptcy declarations, and avoid other personal financial disasters that ultimately impact the taxpayer or consumer.
**our national personal savings rate is NEGATIVE 2%. We are borrowing money just to get by.
**despite the new bankruptcy law designed to make filing less attractive and more difficult, the rate of filings in 2007 has already reached four times the rate of 2006. It is projected that 1 million people will file this year.
**39% of college students graduating with debt have payment equal to more than 8% of their income
It is pretty apparent that parents are not adequately educating their children in money matters. This is a problem, and it belongs to every one of us, for who bears the burden of bankruptcy and social welfare?....you and I.
You must also define "money management." If you are talking about a basic skills set, such as balancing a checkbook and writing checks, that CAN be taught in a couple of weeks. However, those skills have no bearing on the actual management of money. Students need to be taught financial strategies, and would benefit from classes that provide simulated experiences in which they practice decision making in areas such as:
*Buying vs. renting housing.
*Stocks vs. bonds vs. mutual funds?
*Investment strategies for different life stages.
*Credit management.
*Consumer fraud and protection.
*Income taxes
*Retirement planning.
The list goes on. And, in the process of learning something that actually applies to the life they will lead, they gain math and analytical thinking skills.
The issue isn't whether schools should *offer* the class, it's whether a class should be *required* for graduation.
Plonkee: High school *isn't* the best option in my opinion, but that's the grade level that some states are requiring or considering requiring the class.
LTD: Your syllabus sounds pretty good for a high school level class. Offering the class could be a good idea, but not making it a requirement.
Ignorance is often passed down from generation to generation by parents in more areas than just finance. There is no "anti-racism" class mandated by states, but literature and history often must include multicultural backgrounds.
Wow! I believe that schools SHOULD BE MANDATED to teach personal financial management in high school.
An excuse of "there is no room in the curriculum" is unacceptable! Cut out the anthropology, biology, or some other class to enable them to learn about personal finances!
Not everyone will have to remember their anthropology class, but EVERYONE will have to deal with their own personal finances. Bankruptcies and paycheck-to-paycheck living are an EPIDEMIC in America!
However, this is no way minimizes the role of parents in teaching their children about financial management! The school and parents should be partnered together to prepare the student for an excellent education and an ability to be self-sufficient and win financially.
I think as people interested in personal finance, we would like to see what *we* find important included in the state-mandated curriculum, but there are priorities, and personal finance is not included. Parenting is a life skill, and if we were all interested in parenting, some would be calling for mandatory high school classes...
First there would have to be a training program for teachers at the university level, culminating in a bachelor's degree in money management education. Such a degree will never exist. A couple of weeks spent on money management within some other class, like 7th grade home economics, is sufficient.
Parents bear the most responsibility, and schools don't have room in the curriculum for an entire high school level class devoted to something that teachers have had no training for and is the parents' responsibility.
If a high school has the resources, they can create an elective.
The other points he cites (health, physical education, etc) are valid - and the lack of them a symptomatic sign of our struggling education system (another topic entirely). However, I absolutely favor a phased approach that is introduced earlier in school and continues throughout. In absence of that, we are left to rely on our parents...unfortunately, that does not seem to be working very well so far.
which leads to risky behaviors on all sorts of levels. "It won't happen to me."
Teach a money management class in high school and I'll bet most students will think "I don't need this b/c I'm going to be wealthy and I won't need a budget/money management skills."
Of course, WE all know better, but it's not easy to force OUR values about ANYTHING onto a teenager.
That being said, I was taught in public school, 6th grade math how balance a checkbook. It was an entire section of our coursework. I have no idea why our public school decided to do this, but teaching word problems about compounding interest or the present value of money seems to me the natural place to do some commonsense teaching about personal finances. These are essential math skills every kid should have before graduating from high school (If they choose to stick it out for a diploma, which I know many kids do not). Heck, if I have to do present value, I have to break out a spreadsheet and do it manually to ensure I get the math right. But by gum, I get it right because I know the basic math, even if I'm an idiot and have to reverse engineer the calculation every time I need it.
Could it be that hard to teach personal finance as an integral math unit to junior high students? Probably not. That's when most of this level of math is first introduced. I learned about shareholding from a stock market game/apple company our class ran in private school for 6th grade. (Yes, I repeated a grade, but that's another story.)
I think the problem is literally academic though. Kids who are not accustomed to handling money, don't take to the lesson very well because they don't actually watch its ebb and flow out of their wallets. This perhaps is why every kid ought to work for money either inside or outside the home, just to get a taste of the real world and how to handle money. Think of this, how old were you before you handled over $200.00 worth of cash? Have you ever handled $1000.00 worth of cash? What about $5000.00? $10,000.00?
I would wager for most folks, it's not till they are a cashier that they see that kind of money. I only handled sums like that because I worked for my parents. I used to make change for our customers when I was 12. I would help my dad count money at home when I was even younger than that. (Ok, maybe it was wrong sometimes and it was only wrapping pennies, but it got me used to being accurate and why it's darned important.)
This is a great discussion post. I love it. I hope everyone weighs in. There's going to be some great ideas in the comments.
Teachers should be trained to teach basics,
how checking accounts work
what comes out of paychecks
credit card terms
staying organized to pay bills
Parents can't teach this stuff because they don't know.
No room in the curriculum is an excuse for "afraid of change". We need to fight for teaching our kids what matter. Unfortuneately, corporations pay for the lobbyists who make sure our lack of education continues to benefit them.
If schools are not teaching life skills, then it's a poor educational system. How many COLLEGE graduate know how to effectively file an income tax form or realize how much their credit card purchases and educational loans are costing in interest? Certainly, HS grads know even less about it.
Math becomes a much more meaningful subject when it is applied to real life situations. I never understoon why I had to take Geometry in HS (College track requirement,) measuring the square feet in mythical football fields for no reason I could fathom. But the first time, as a married adule, that I purchased wall to wall carpets, it suddenly dawned on me that knowing the area of a room might be useful!
When I was in 7th and 8th grades a million years ago in Philadelphia, our Math teacher had the local bank bring in blank checks and registers, and we learned how to write checks and blanace an account and how compound interest worked. When I realized that my kids were not getting any of this kind of education in their schools, I had them write out our household checks (I signed them,) record them, and then reconcile the account to our statements each month. When they got to college and had their own checking accounts, they told me they were among the only ones in their class who knew how to handle their accounts. I also taught them what interest did to unpaid balances on credit card purchases, and to this day, they never run balances on their credit cards. (As a Public Health Educator who saw kids who knew nothing about handling their own health care, I also started sending my kids into their doc appointments alone (I'd sit in the waiting room and just talk to the doc afterwards,) from the time they were about 13. They'd make lists of questions to take in with them, and learned how to navigate the medical care system.)
Yes, this parent taught them, but obviously a lot of other college-bound kids did not get the help from parents, and frankly, I'm pretty sure the non-college bound (Yes Virginia, there IS a whole population of kids who don't go to college!) get even less help in handling money.
Teachers don't have to be investment specialists to teach this stuff - and they can aleays bring in guests presenters from local banks and investment compaines to spice up the class. Real life people the kids may have to deal with in the future.
And not everything has to be a separate course...I run teacher workshops on how to integrate Health Eduction into English, Science, Social Studies and Math classes...at ALL grade levels.
Think outside the box, people!
Put a bunch of jobs with different incomes in a hat, and let the kids pick. Give them Monopoly money to match the jobs and income levels. Let them make out a budget, and work out "credit card" problems - you can get that big-screen TV on your salary as a bus driver, but you need to see the hole it makes in your monthly/weekly budget, and for how long. Teach them how to fill out a simple tax form! Teach them how to buy a house!
There's very little I've taken away from school that would be as useful as most of the above.
2) Our whole culture is designed to encourage people to spend money you don’t have. Do you think the average American is going to wait until they have the money to buy a new washer and dryer when the old one breaks down? Do you think anyone can convince people to use a laundromat or wash their clothes in the sink? “Buy now, and make no payments, pay no interest for 12 months!�
3) Being in debt is not causing all the problems with debt in our society. It’s the inability to manage debt that ruins most people. I came out of college with 23 credit cards, no job and a pissed off Mom. I got two jobs, never ignored a bill, paid the minimum payments or less, paid tons of interest, and worked hard to get pay raises on my job. Eventually I got out of debt and had a high credit score in the end. I wouldn’t do it again, and I wouldn’t endorse it. But I learned that stress, denial, and vanity keep people from managing their debt much more than lack of money.
So where else are people supposed to go for this information. I didn't even know how to fill out my W-4 form for my first job and no one could tell me what to do.
In fact I still don't understand PF very well.
As many people that there are in this country with credit problems I am surprised people are taking the subject so lightly.
No wonder our economy is in trouble when people put subjects that only some people will use after High School above a subject that everyone will have to use for the rest of their lives. Literature, History and Art are important, but knowing how many wives Henry the 8th had is not going to prepare you for buying a house or how to handle a credit card.
But you raise a good question -- where do people go when their parents fail them? Well, it takes some initiative, reading, and research. Trial and error is usually how things work, but it doesn't have to be. In fact, optional/elective classes throughout the public school system would have helped you. But why couldn't anyone tell you what to do with a W-4 form? I'm sure if you were confused by the form, someone at the company for which you were to begin working would help you out. The W-4 is basically self-explanatory (instructions are at the top of the form) as long as you stick to the first page -- and as someone newly entering the workforce, chances are that's all you'll need.
It works like this:
Students get jobs and salaries based on their current GPA (the higher your GPA, the better paying job you get). Several booths are set-up with different signs relating life events. Students go to each to add children, housing, entertainment, cars, etc into their budget. At the end, they have to have a balanced budget.
I helped out at one of these events at my local high school and it was great to see these kids doing the math and complaining how much kids cost or how they can't buy the clothes they want because their job doesn't allow it.
This is the the treasurer's site with information on the program: http://www.yourmoneynowonline.org/content/view/...
I really think it should be required of all high school seniors. Maybe even a primer as a freshmen. It is a real-life scenario that had another affect of making students more conscious of their grades. The 1.5 GPA students with the minimum wage jobs learned quickly that they are not going to be able to afford the lifestyles that their parents are currently providing them.
My two cents.
The knowledge required is greater than ever. We don't just balance our checkbooks, keep some savings in the bank and work towards a nice beefy pension like the WWII generation did. We are shouldered with more credit, more investment choices and more responsibilities for our own retirements than ever before. Simple math doesn't adequately confront these issues. Parents are ill-equipped for these challenges in general. Most parents didn't learn this, because they were taught the same old credo "get an education, get a job with benefits, work 30-40 years and get a pension" We are demanding that the blind lead the blind on one hand and than wonder why we are a nation of debtors on the other.
How many young adults will actually use Algebra II math concepts on a regular basis compared to handling money and making financial decisions that will affect their future?
Wouldn't it make more sense if high school students could have a choice between higher math courses or personal finance courses to fulfil the Core 40 requirements?
And concerning "teachers not being replacements for parents" - Do you understand that there are single mothers and fathers out there that barely have time to see their children throughout the day - nonetheless have time to talk about how to manage money? Did you know that there are students that dedicate their lives to school, sports, community service, and other extracurricular activities and that they spend more time in class than they do at their own home - what do they do then - when they are dedicated and diligent students?