MP Dunleavy writes about the potential financial problems facing the next generation of children. Apparently there is a strong consensus that public school should be teaching our children about finances. That we need to pay more taxes and have classes in school to teach them they must pay back loans, interest rates and loan lengths, and credit card disclosures.
I gotta say I understand where MP is coming from but the ideas she’s writing about from Jumpstart, a program that is to teach kids finances, is plain old stupid.
Personal finance starts at home. But I understand why people want it taught in school because right now we’re in the midst of basically no one understands personal finance at all. So where else are we going to educate younger people?
But it starts with the BASICS. Like how to balance a checkbook and money does not grow on trees. Step one, learn how to budget and that you cannot afford everything. People need to start learning how to live within their means! Actually go through and have people attempt to balance a checkbook. After all tons of americans overdraft everyday! How does that happen????
Who cares about paying back loans, credit cards, interest rates??? That’s way beyond what most people know now. Apparently if 33% of americans have no savings there are bigger problems than paying back loans. We have to educate people how to live on what they earn PERIOD. We need to learn to save to buy things and not just charge them.
Second, we need to emphasize retirement savings and starting early. Previous generations have gotten away with not saving for retirement because of Social Security and generous company pensions. That’s in the past. Now we use 401k/IRAs to save for retirement, and that’s the second thing to be taught. What is a 401k/IRA and how to contribute to it. Make it automatic.
Third, explain what a credit card is and how it works. Explain that you are buying things you cannot afford if you cannot afford to pay off the bill in full every month. Explain that interest is charged when you cannot afford something. Go through and show people how interest is calculated on a credit card.
Those three things are the basic building blocks. HOWEVER the next major thing that should be taught is student loans. How taking out massive loans can cripple you forever. What the payments will be as people take out $50k, $100k in loans.
Finally if there really is time teach people about mortgages. Or else perhaps everyone who gets a mortgage for the first time, the government should instead require a first time homebuyers class and you get a $500 credit to your closing fees or something. Incentivize it so people will go and learn about mortgages before they buy.
But truthfully, Americans need more basic teaching about personal finance than what the article talks about. MP Dunleavy can’t even get it through her head that she doesn’t need to go to Spain for a vacation. But heck, of course she should be teaching her kid the more financially savvy moves of taking out loans and charging credit cards instead of how to balance a checkbook, draw up a budget, and live within ones means. She doesn’t do it, so why should they?
And that is the question that will be asked by many, many children.
8 responses so far ↓
1 Jim ~ mydebtblog.com // May 15, 2008 at 2:30 pm
I agree with some of your points, and disagree with other things. Financial education does begin in the home, but if the parents don’t know what they’re doing, then what? Turning to the school system to teach kids what to do with money could be a start.
I really don’t agree with the government forcing people to have to take a class in order to buy their first home. I do agree with having the option available to take a class on buying a home, just not as a requirement. Government regulation isn’t going to make people more responsible, people have to step up and take the initiative.
Sometimes we can’t always get people to see things the way we would like. The ones who can adapt and figure out this money thing are the ones who will succeed. Children do follow their parent’s actions, so if the parents don’t behave with money neither will the kids.
2 Livingalmostlarge // May 15, 2008 at 5:43 pm
LOL, hence why we need to teach basics. NOT CC, mortgages, loans.
3 Kristy // May 16, 2008 at 9:20 am
Yeah, but most people don’t know the basics either. Some people can’t even balance their checkbooks and live within their means….what are they teaching their children? This is why finance education can’t start at home.
4 LivingAlmostLarge // May 16, 2008 at 2:18 pm
Exactly why we need to start with basics. People can’t do simple math it seems.
5 Kathryn // May 16, 2008 at 5:07 pm
Hi. I came upon your blog as part of a Google alert and really admire your goal searching for financial freedom. You’ve shared some thought-provoking ideas on personal finance education.
This is a big topic (for both individuals and for our country) and getting bigger all the time (in terms of awareness and the desire to work toward a positive result). There are many people engaged in providing money lessons, making financial education more broadly available to all, and I’m privileged to work with many of them.
You are right to support advocate a “start with the basics” approach. I think the most important lesson at start with - at any and every age - is that of Needs v. Wants. We’re a society with a whole lot of wants. As more and more is available to us, we can get confused about what we “need.” Combine that with 1,000 ads a day coming our way, each one selling us something “we’ve got to have,” and Americans find it hard to resist the temptation to spend – myself included.
To that end, parents, and other adults involved in the lives of kids, can begin a child’s financial education as soon as that child says “I want” at a store. I know that phrase is one learned very young. Still, we need to take advantage of as many teachable moments as we can to explain that money is a finite commodity and that we as a family or household have to make decisions about how we use the money we earn. We also have to watch how we ourselves act. Kids learn much more from watching our actions, and they absolutely notice when our actions contradict our words. I realize this is very simplistic, but it’s a central message in helping us learn to live within our means as you so succinctly put it.
I am involved with the Jump$tart Coalition for Personal Financial Literacy, which MP Dunleavey mentions in her article. I did want you to know that Ms. Duleavey mentioned only some - but by no means all - of the voluntary standards that Jump$tart has created to help schools and others teach and measure financial education. Ms. Duleavey focused credit. There are standards and benchmarks – at several age levels – for all the basic areas of personal finance, including:
• Financial Responsibility and Decision Making
• Income and Careers
• Planning and Money Management
• Credit and Debt
• Risk Management and Insurance
• Saving and Investing
If you’d like to learn more about all the standards, please visit that section of the coalition’s website at http://www.jumpstart.org/guide.html. The standards work was done by some of the best educational minds working on this subject matter (not mine) as dedicated volunteers.
Thanks again for shining a light on and providing an opportunity to discuss this important topic.
Finance Gets Personal » Carnival of Money Stories #62: A Week of Money Stories | Finance Gets Personal - Jun 3, 2008
Carnivals of the Week | LivingAlmostLarge - Jun 3, 2008
The Finally On Time Monday Linklets « Are You Going To Be This Way The Rest of The Time I Know You? - Jun 9, 2008
Leave a Comment