Looking back at my time in high school, there is one thing missing. There was never any required personal finance course for students to hone their financial acumen. This sets many back. Is financial literacy less important than learning about Shakespeare? Would you rather understand what iambic pentameter is than how to use the financial markets to your advantage? There seems to be a disconnect somewhere.
Adulting
So much of being an adult is knowing how to handle money. Budgeting to make sure you don’t run out. Investing to make sure you can retire. Different loan terms when you are shopping for a mortgage for that dream home you have always wanted. How about the different insurances you need to navigate? I bet you never learned about any of those. You just got thrown in the fire and hoped for the best.
Don’t get me started on balancing a checkbook. Do you even know how? But if you are living close to paycheck to paycheck, it is an essential skill to make sure your bank account never goes to $0. And again, something that isn’t taught in our schools.
An Education for All
Just like our schools should be open for anyone to get an education, so should a financial education be available for everyone. Many people struggle with their finances and not ever learning about how to manage money sure doesn’t help. I can guarantee that showing that understanding the basics of personal finances is not difficult and anyone can take control of their money situation would help solve many of the problems around a person’s financial situation. How could it not? Knowledge is power after all.
Just one mandatory course could make all the difference in people’s lives. Teach them about the stock market. And not that it is random. I remember in 5th grade we had fake money that we could use to buy rewards at the end of a quarter. You could “invest” that money into bonds or stocks. The bonds were guaranteed a certain return. The stocks on the other hand were a toss up. Basically saying at random the stocks could go up and down. The teacher was essentially saying stocks aren’t worth it. That the return is just random, missing the entire premise of the long-term average of the markets. I understand the point trying to be made but it is off the mark and would do more harm than good.
We need to teach what debt will do to your finances. Things like credit cards are not toys to be used for your gain. They will be your financial demise if you mess around. How compounding can be used for you or against you. You can either fund your own retirement, or someone else’s. There is so much knowledge to be learned that is never mentioned in our required curriculum.
The Online World
All of the information I am talking about can be found online. Want to know how the market works? Just Google it and you will find the answers you seek. Then why do you need a class if you can just look it up yourself? Great question and I am glad you asked.
First off, not everyone has easy access to a computer or internet to search the human hive mind of Google. And remember, everyone should have the access to learn anything they need to become financially literate.
Secondly, those who need the advice and knowledge don’t always go looking for it until it is too late. You usually don’t go looking for the solution to the problem until you already have that problem, not before. This doesn’t exactly work with personal finance. Once you are in a major debt hole, there is no easy fix. Wouldn’t it be better to educate before the problem occurred and avoid the years of pain in trying to get back to $0 debt? I knew you would agree.
The Only Solution for Financial Literacy
To me, the only solution to the financial woes many find themselves in is to educate, educate, educate. We need to make financial education a priority for the students of today to do everything we can to make sure they are not the ones drowning in debt in the future. We need to give them a chance at success. The current system does not do that. Teach our kids the skills they will really need to survive in the real world.
Only then will you start to see a significant shift in the financial well-being of the population as a whole. It all starts with knowledge. Learn then apply. Use compounding to your advantage. Financial success will happen. But you must first learn the skills. Our schools should teach them but currently we are failing our kids. It is time for change! It is time to put the spotlight on financial literacy.