I think that in today’s world financial literacy is more important than ever to financial success in life and yet it seems like many kids graduating high school are financially illiterate. In my opinion everyone should a fundamental understanding of how a savings account, CD account, IRA, Roth IRA, 401(k) and MSA account work. Likewise, everyone should have a fundamental understanding of the equity markets, derivatives markets, futures markets, bond and treasury markets along with an understanding of how interest rates work and their effects on financial instruments like mortgages. Kids should be taught about the various forms of business structures available to them from starting a simple DBA to the numerous flavors of corporations out there. All this can be taught without giving financial advice, which may be more in the domain of parents, but by focusing on the theoretical and historical aspects of financial instruments so that kids have a better understanding of how they work and are better prepared for life in general.
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But more importantly: What a wide swath of folks need is how to survive poverty. So many people never get to the point of even considering a CD or IRA. Most folks only really need the bank account for paying things. 401(k) simply because that's what is offered by the employer, and you have to get paid enough to really use it. Sometimes $5 today really is more important than $10 when you retire since it means food to make it to retirement. MSA is similar: You need the extra money. No point in a MSA if you can't afford insurance anyway.
If you can't teach how to afford poverty, the rest is useless and completely tone deaf.
Likewise, most folks aren't going to open a business and many won't invest in markets.
Realistically, what we need are online resources in plain, simple english that explains these things and/or classes that are mandatory for folks starting businesses. The younger the person, the more likely the person is to be pretty good at consuming information on the internet. Just make sure folks know where to go to get good information.
You've got to convince people that by spending every windfall (and by windfall I literally mean like 20 to 50 extra dollars) to "make up" for the resentment they felt when they couldn't pay their rent on time and got Eviction Notice #1... they've got to SAVE IT or the entire rest of their life will just be a boom and bust cycle of windfalls. Once you are proactively "defending" not eating into your hard earned savings account, your mentality changes 180 degrees - in a single day vs when you are living in the red 365 day/yr.
I know a guy from college, poorest guy I know, constantly begging off family & getting late fees on his rent. He works a crap job though at least 250% minimum wage because he couldn't finish school on the 6 years of full-ride scholarship he got for having the right skin color (school diversity scholarship) and then still wanted a degree so took out a $80,000 loan for a fraud school. He failed out.
I lived 2 years on his same income, it is low, but he doesn't live in a HCOL area - so I can assure you it is plenty if carefully managed. He doesn't buy anything impressive, he appears to live a basic life, BUT: He just has no idea how to manage his emotions and therefore to manage his occasional spending. There are probably 10 guys like him for every person who actually is so broke there is no way out. I know how he uses his windfalls - he openly admits it to me without even thinking for a second that it makes no sense - and he's in his 40s now. I can't lecture on it because the emotional wall that comes up won't let him hear - it is "capitalism" that is to blame apparently and some politicians. This is what America's "poor" looks like, it is far more a mental state than concrete reality.
No, this is what poverty looks like in the strawman you've built up in your head. I guarantee you the person you describe exists, and is just as you describe - but they're also not representative of American poverty. But they're certainly the caricature of it that certain groups love to push for political reasons and have been doing so consistently for decades. In the 80s it went by the myth of the 'welfare queens'. A caricature that was demonstrably false - but that didn't stop it from becoming a commonly held perspective at the time (people have since learned the truth). And the process goes back further than that.
Every "windfall" takes care of a need, makes you more secure with things like food and shelter, or gives you some mental relief by providing a few moments of entertainment. There is no saving for those other things if you have been walking to work because you can't afford to fix the flat tire or if you've been in pain due to poor shoes.
There is no advice on how to afford things if you only have $5 extra at the end of the month and definitely no advice on how to afford life if you simply don't earn enough. "Saving a windfall" is pointless if you have a hospital bill that is threatening to sue and deduct the money from your paycheck.
I am not sure you really understand poverty.
At our class we had pre-defined businesses at first to learn how to file the tax returns. But for a long term project we could think of one on our own. The task wasn't to come up with a business plan though so nobody really had a groundbreaking ideas. We could just pick something like a bakery, research initial investment and go from there.
We could also build a tech project in our last year of school to be excused from part of the graduation exam. We just had to pitch it and present it instead of the exam (we also had to provide code and/or tech documentation). Though we didn't need a business plan for that either. But it was obviously better for the grade if the project had at least a basic business plan.
For example, a better question would be "Why don't we eliminate <high-school-biology> and teach finance instead?"
I think there's too much algebra in secondary school (and not enough of it in college).
Few people are gonna miss matrix multiplication after school.
I strongly support adding personal finance and logic (philosophy of arguement) courses to the core curriculum.
Alternatively, I would drop things to 3 years of English to add a year of Home Economics that covered basic cooking, practical nutrition, taxes, personal finances including insurance, and saving for retirement. All I can recall from mine was a few weeks we learned how to fill out a check and sew a pillow.
I don't have a good argument against, but this makes me sad to read. learning all the names for different shapes was the first (and last, until I got to college) time that I found math interesting.
We could have at least spent some of that time learning about finance.
I'm also pretty sure a lot of my courses, could have been truncated to allow extra time for another class - I don't see why it has to be so binary.
We have this debate about math and reading. Finance? Good luck.
I found it much more interesting to study things with practical implications, and I also think embedding financial literacy into maths might be a good idea.
I'll add that I did of course eventually find uses for some of the things I was taught in maths class: path finding algorithms for a game AI, neural networks, genetic algorithms, all sorts. But in class, I didn't know any of these uses.
How much money do you think most people have? Half this stuff is completely irrelevant to average workers who don't have income to invest in variety or depth.
Sure, basic financial responsibility and options should be core, or near, but beyond that a detailed dive is going to supplant some other core educational area for no obviously good reason.
Also healthy eating habits and information about birth control should be taught in addition to financial literacy and at the expense of the current curriculum, but it is not because politics (both left and right here).
https://dqydj.com/average-median-top-net-worth-percentiles/
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For example, I had French classes for 4 years and can't speak, read or write it to save my life. The teacher wasn't bad and kept telling me, who knows maybe one day I'd move to France. As a kid, I thought the whole thing was ridiculous. I was quite happy where I was.
Better option is to give ppl, at any point in their life, a route to learning when they discover a knowledge gap.
As did happen when I was sent off for work in France.
I really appreciated/found really helpful the tip of the "seven bank accounts" (Jordan Page, FunCheapOrFree)(also not connected in any way): https://www.youtube.com/watch?v=auzLhKvsxnQ
(Ramsey a similar type of management the "envelope system").
Edit: from what he sometimes says on his radio show, some schools in the USA 'teach' his program/system/7-step-process. I find this amazing and I wish that this (or something similar) is properly taught to every school on the planet.
This information is not available to the black community. Now, obviously, any black person is technically capable of tuning into the Fox News channel where Dave Ramsey has a show, or dial their radio to conservative radio stations where Dave Ramsey is broadcast. But in practical terms, Dave Ramsey is unavailable to black people. And they are actively discouraged by our culture from even finding out that he exists.
I became aware of this in a discussion with a black friend i which she believed something that was "sort of" untrue. It was something approximately like she believed that white people grow up in homes where certain concepts like basic personal finance are taught. This was so bizarre sounding to me, because my actual life experience was so different. I grew up in a poor "white trash" household. My parents were/are buried in debt up to their necks. Basic personal finance, the Ramsey flavor or otherwise, was simply not in the ether. I didn't grow up with Fox on the TV either, or anything even pretending to be news. I still don't generally watch Fox News, but am a Ramsey fan.
I believe my friend was technically wrong, but maybe directionally right. She was directionally right in the sense that even though Dave Ramsey wasn't in my household, it was culturally at least acceptable. If you're far enough left wing to where you can't bring yourself to listen to Fox News/conservative radio, you can maybe get by with Clark Howard combined with Planet Money. Still extremely white in culture and audience.
I hope we figure out some way to get past this. Because even the pitiful tools that are available aren't available to everyone.
Nobody yet sent me back in time.
When I took ASL I remember them saying the reason ASL was accepted as a foreign language was because it has a culture that was taught along with it. It may or may not be taken seriously when taught, but a lot of people grow up in a bubble and don't get exposed to other cultures.
I've lived with a bunch of people that were fluent in English, but it wasn't their first language and others who were English native but studied foreign languages more seriously. Learning another language makes you think more about your own language. One friend said her teacher gave her a basics of English book early on when studying Japanese.
Even suppose you make students take a second financial literacy course, at the expense of letting them study what they want (electives), it's not going to help. Despite all the core curriculum that already exists, just because you're forced to take a class does not mean you're going to learn its material. Maybe find a better way to solve your grand social engineering problem, because "more education" isn't it, and disrupts a lot of students from actually achieving a good education because they're forced to deal with required core BS aimed at the lowest common denominator.
But I see alot of parents who don't want to discuss day to day finances or how much money they make. Kids need to see to learn.
I certainly didn't take one in Virginia 20 years ago.
Finance by itself is not that complicated. If you know the underlying maths, that's the kind of thing you can learn on the spot, at least on a basic level. If you want more than that, you probably should hire an accountant, or it becomes specialized studies.
For the rest, I don't know what kids learn in the US but I guess things like the great depression are part of the history lessons. Do they teach that without any insight about the economics of it?
So there you have it, you know the stock market and taxes exist from history lessons and you learn the mathematical operations to run the numbers. I don't remember learning about the legal aspect of finance (which may be the most important of all), but we certainly had on overview on how the legal system works.
This is a common belief, but it unfortunately doesn't work that way. "Transfer of learning" as it is known in educational psychology, (similar to 'learning how to learn',) is basically a failure. People have been studying it for over 50 years, and it turns out that students are very bad at taking things they learn in one class, and applying it in another.[1]
[1] https://en.wikipedia.org/wiki/The_Case_Against_Education
If history is going to be discussed, it should be more just one view. The Great Depression, for example, is often described as a failure of economic freedom, rather than the failure of the government's myriad interventions.
Knowing only ONE side of the story doesn't necessarily leave kids better prepared to learn, unless it's essentially true (good luck reaching that consensus).
I don't think it's important for kids to learn about specific financial products like savings accounts, CDs, different categories of stocks, etc. That all changes by the time they get into the working world anyway. But just knowing how debt & compound interest works would save many young adults from mistakes that cost them decades of their life.
And most schools have a government class, where you learn why taxes exist and how they've changed over time. This class is generally also where you learn about the legal system.
Schools are mainly about supplying cheap workforce for existing companies.
Learning things like starting your own company or managing money in a way that increases negotiation power of the workers, is a disadvantage for companies.
<tin foil hat mode:off>
Having financial knowledge is also not always a direct requirement to get the job at a company, so actually it doesn't provide a direct competitive advantage if you are in the job seeker pool.
These 2 factors create maybe the equilibrium of the current composition of the curriculum.
This is historically true and well documented. There is no tin foil hat here.
> Learning things like starting your own company or managing money in a way that increases negotiation power of the workers, is a disadvantage for companies.
Also historically true. For centuries the education of aristocrats was focused on producing leaders and everybody else was trained to become a worker.
In many countries schooling is still very authoritarian...
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However, up until high school, there are a bunch of subjects that are taught purely for the benefit of the students. I'm thinking about sports / physical education, geography, history, etc. I didn't use anything I learned in those during university and none of the job interviews I've been through touched on those either.