4/11/2006

Lack Of Financial Knowledge Highlights True Problem

After reading the contents of a post called “USATODAY.com - U.S. teenagers lack financial literacy” from the FinanceProfessor blog, I was not surprised at all. The article linked within the post goes on to show the grim statistics of high school students’ lack of financial knowledge. After reading this article, my first thought was that their lack of knowledge signals a major lack of competent teaching. Based on my own high school experience, I feel there is a real disconnect between many high school classes, and relevant real life instruction, including basic financial techniques such as budgeting, and investing, etc. The only class I recall teaching much in the way of financial information were my adult roles I and II classes. I think it’s time to stop reporting on this information, and start being proactive about it. I liked the blog author’s suggestion to start volunteering at high schools to teach students valuable financial information. I’m sure the positive externalities associated with such service would prove invaluable!

6 comments:

will said...

I thought this article was interesting and I agree there is a problem. I can see many high school students that have no idea how to budget or plan for expenses. Most that have part-time jobs spend their money on whatever they want and don't seem to have a financial plan. I think it is important for kids in high school and even younger to understand the importance of budgeting. It will make life much easier when they get into the "real world" and have to start planning to pay bills. I think requiring classes starting in junior high with the basics of savings and having different accounts is a wonderful idea. We teach kids sex education in high school, wouldn't a finance class be just as valuable if not more.

Cole said...

I have a few things to say about this post. First, money/financial classes are being taught right here in the Iron County School District. This may not be the case elsewhere, but it is happening in Cedar City high schools. Second, the biggest problem is not in the schools. These concepts should be learned at home, period. Classes in high school should only act to supplement that learning. If a student does not understand money by the time he/she graduates, it is the parents fault.

The problem is that too many parents don't know how to manage money. This should be evident by high levels of debt and bankruptcy. Classes will be of little benefit to a student who sees poor money management habits in action at home.

Dr. Tufte said...

-1 on Will's comment for grammatical problems.

-1 on Cole's comment for grammatical problems.

There is a movement to get this sort of thing taught in schools nationwide. The problem with parents doing it is that the clearly do a lousy job.

Matthew said...

Dr. Tufte said that the problem with leaving financial lessons up to parents is that they are doing a lousy job. I couldn't agree more! Parents who have good financial skills teach their kids good financial habits. Parents who have bad financial skills teach their kids bad financial habits (even if it's just by example). So, the rich (good financial skills) get richer and the poor (bad financial skills) get poorer. It is an endless cycle that must be stopped early on, because we are just bailing the poor out through taxes anyway. I feel that financial skills are extremely important and several personal finance classes should be required in schools. If kids are already taught at home, that's great, because the more education on such an important life skill, the better.

Finance Matters said...

I agree completely, money is a very important part of our lives and should be taught at a very early age. I wish I knew the importance of budgets, saving, spending etc. when I was younger. My first major financial transaction took place right out of college with a new car purchase, which later proved to be one of my worst financial decisions. Take a look at my car tips article.

Dr. Tufte said...

Agreed.