“Financial illiteracy has reached epidemic levels.” Author Braun Mincher has an editorial in the Austin American-Statesman on why every school in the U.S. should teach financial literacy. [Statesman]
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I actually wrote a research paper on just this subject a couple of years ago. There are some good programs out there, available to educators free of charge – NEFE is a notable one. Visit hsfpp.nefe.org.
This is why I’m getting a WSJ subscription for my birthday. Sigh.
Overall, I agree that we need our children to learn about proper financial management before they leave grade school. However, I’d be afraid to see the curriculum of such a program with the current environment of our public schools. They can’t even get high school students to learn algebra, let alone get into 401k’s and financial issues.
Government financial education in my school was about how to fill out forms for food stamps, where to get unemployment, etc. No wonder there’s an epidemic of financial illiteracy.
This newfound movement for literacy won’t go far as long as the government keeps bailing people out. Best school is the one of hard-knocks.
We’re already teaching my 2 year old about finances. Just basics, but he knows that daddy goes to work (and thus can’t play) to earn money that we trade for the things we need. We give him beans when he does work that he can trade for treats. Not enough beans, no treats. As he get’s older, we’ll introduce borrowing and lending and compound interest concepts for both cases. I expect he’ll be better versed as a kindergartner than most adults.
PLEASE DON’T!!!
Otherwise I will not have anybody to make my cash work for me
Another one for the DUH files. Now what is anyone going to do about it? I’d honestly like to see some of the Gates Foundation’s money going toward this sort of thing…
In a previous incarnation in executive management, I found the need to mentor (supposedly) intelligent and skilled staff members about fiscal management.
Like taking 10 $10 bills and throwing them 3 away, because that’s what happens with fees and interest if you get $100 cash on your credit card.
And if you look at the numeracy standards – [youmustbefromaway.blogspot.com] – that educators think are adequate, I frankly get the heebie-jeebies
As long as America has state-sponsored gambling, much of which is supposed to fund education, American public schools will never teach financial literacy. Too much conflict of interest.
There’s rudimentary financial literacy, and then there’s economic literacy.
I’m a pretty smart cookie, and I have lots of degrees on my wall (all mine, even). I can handle calculations around my household expenses, credit card, student loans, housing, transportation — all that. We’re good to go.
But I have a friend who works in some complex Finance circles in New York, and every time he tries to explain some higher concept to me it just makes no sense. When companies start using words like “leverage” and “derivative” and “dividend” I just get glazed over. So where’s the place to teach that nonsense?
@EtoilePB: It may be more of a problem with your friend than you. I’m not saying that your friend doesn’t know his stuff, but some people just can’t explain things. I think we all know cliche Engineer-ish people like that.
When you get glazed over, they’ve probably said too many new or esoteric terms and you can’t use context anymore to figure things out. Once context or flat-out definitions are gone in new subjects, anyone will get lost.
Like Bob says, “baby steps… baby steps”.
@jpmoney: It may be more of a problem with your friend than you. I’m not saying that your friend doesn’t know his stuff, but some people just can’t explain things. I think we all know cliche Engineer-ish people like that.
Mmm, true, although this particular friend is an ex- and he and I have had many, many, many complicated discussions over the years.
I’m more likely to grasp physics and engineering concepts, when he talks about those, than I am to grasp economics and finance.
(Then again, with some aspects of it, if I say, “That makes no sense,” it appears I may be RIGHT. See also: huge Wall St. collapse.)
I think this would be a great idea for high schools and colleges.
When I was in high school, mumble years ago, we did have a class called “Personal Finance.” It was good. We pretended to get a job, file W2s, sign up for a 401K, read and understand our paycheck stub, set up a basic budget, and keep track of and reconcile checking and savings accounts. As a final project we “filed” form 1040A.
If there had been a more advanced follow-up class, it could have included loans and credit cards, basic investing, understanding a business balance sheet, and picking a charity based on financial performance.
Books I’d recommend:
Rich Dad, Poor Dad
[www.amazon.com]
A very good basic understanding of how to NOT be poor.
Peter Schiff – Crash Proof
[www.amazon.com]
Good understanding of why we are failing, and what to do about it.
Jim Rogers – Hot Commodities
[www.amazon.com]
Commodities are down now and honestly a good buy. People always need stuff. And the same people now that told you to ignore commodities and buy stocks told Jim Rogers that 25 years ago. Those people maybe doubled their earnings. He made 50+ times what he invested.
And the same people now that told you to ignore commodities and buy stocks told Jim Rogers that 25 years ago. Those people maybe doubled their earnings. He made 50+ times what he invested.
Just a word of Warning. Commodities are extremely risky and you have to be on top of them everyday. You don’t get the extra returns over stocks for free, you pay with increased risk. For the vast majority of people stocks is the way to go and the people that gave Jim that advice were correct, he was just one of the few that proved to be the exception. Unless you are willing to lose possibly major money and commit yourself to studying the commodity markets stay away.
Also the blanket statement that commodities are down and to buy now is reckless and pretty inaccurate. As the stock market continues to tank and be unstable investors continue switching to things with intrinsic value such as commodities. Precious metal prices are so high they are to the moon and past it. Grains are doing great. Oil was just kept going up and up and was recently are record high prices. So perhaps you should be a little more specific when giving advice.