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Basic Finance: Should It Be Taught In Schools?  
User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Posted (7 years 7 months 1 week 2 days 5 hours ago) and read 1776 times:

After reading a lot of literature pertaining to problems with savings and retirement in the United States, one of the main problems in the current system is that the majority of Americans are poorly equipped to make basic financial decisions.

A lot of problems with savings and poor retirement planning are caused by lack of education. Many Americans know little or nothing about interest rates, mortgages, retirement pensions and so forth. It would seem that introducing these topics to high school seniors before graduating would help them out a lot when planning their finances for the future. I'm not talking about a class on stocks, bonds etc, but more an introduction to basic financial instruments: interest rates, savings plans mortgages, loans, retirement planning, and such.

What do you all think?

13 replies: All unread, jump to last
 
User currently offlineJaws707 From United States of America, joined Aug 2001, 708 posts, RR: 1
Reply 1, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1767 times:

Absolutely. The savings rate in this country is terrible and I believe that needs to be fixed. Having some sort of class would go a long way towards acheiving that. It's sad how many college graduates I know that have no sense about saving for the future, or how interest compounding makes saving so much easier.

User currently offlinePope From , joined Dec 1969, posts, RR:
Reply 2, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1767 times:

I agree with the conclusion that Americans are poorly equipped to make basic financial decisions. However, I have a problem with adding yet another task to schools which already do a generally poor job teaching what they are already covering.

EDUCATION BEGINS AT HOME.

Three weeks ago my wife and I took our 5 year old daughter to the bank to open a checking account. We deposited the money she had received at Christmas to open it. We decided to give her a $5/week allowance (paid in cash in $1 bills) and told her that anything she saved we would match when she deposited it into her bank account.

We also told her that the days of mommy and daddy buying toys and candy throughout the week were over. She now had her money and could spend it as she saw fit (though we retain veto power over all expenditures). We explained that we would continue to pay for everything she needed and give her gifts at birthday, holidays and from time to time throughout the year, but the little extras of life where now her responsibility.

We also told her that she'd have to use "her money" for her weekly donation at church (previously we would give her a dollar so she could but in the church basket during the service for children).

I was amazed at the result. We were at this weekend's Orange and Blue football game (Florida's last scrimage of the spring practice period [attended by almost 50,000 fans]) and she wanted to get popcorn. This is after the pizza and gatorades we had purchased earlier. My wife told her "no". She insisted that she wanted popcorn. I told her that if she wanted it, she'd have to fork out the $3.50 from her $5 weekly allowance. Immediately the answer changed.

Even a 5 year old can understand the basic economic concepts of rational allocation of resources when it is presented to them in simple terms. Every week we give her her 5 x $1 bills and she divides the money up into three piles. The $1 she gives at church, the $1 she uses to buy candy and the $3 she puts into her wallet. At the end of the week we take her to the bank and she deposits everything she's got left. We help her fill out a deposit slip and then have her record the transaction in her check book (we've taken away all the checks because I just don't think she'd get the concept as well if the checks were used as a surrogate for actual cash). The math is simple enough that she can handle it and we're there to help explain the concepts and answer her questions.

In a couple of months I want to show her how to use MS Money to keep her check book straight

I know that sooner or later she's going to ask to buy something that's more than she has in her account and we'll use that as an opportuntity to explain interest to her.

This isn't brain surgery - it just requires a little bit of parental involvment.

[Edited 2007-04-18 15:38:01]

User currently offlineUH60FtRucker From , joined Dec 1969, posts, RR:
Reply 3, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1756 times:

Absolutely.

Americans are saving less, planning less, all the while they're spending more, racking up giant debts and credit problems.

Disciplined Personal Finance seems to be a dying quality. And if people can't understand their own finances... how can you expect them to understand the bigger picture? Just look at a lot of the wacky claims people make when debating economics or the economy. Heck, you don't have to look far, ANET has plenty of them!

It should be taught at least every year during high school. And in college it should be mandatory to teach personal finance, especially how to efficiently cope with debt (because NO college student ever graduates with debt!!!  Wink )

And we really ought to start encouraging greater personal savings. Doing so helps the greater good by reducing the number of individuals who must seek bankruptcy or federal help when in tough times. And bankruptcy should become even harder to declare. Credit cards should be used less often, and criteria for mortgages or large loans should be more stringent. Car loans should be more strict -- stopping a person making $25,000 annual, from buying a luxury SUV. Etc...

-UH60


User currently offlineFr8mech From United States of America, joined Sep 2005, 5598 posts, RR: 15
Reply 4, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1753 times:

I'd go a step further and require a basic economics class (supply/demand, diminishing returns, taxation models, etc) along with finance and accounting. These should be required, in basic form, in junior high (grade 7 or 8) and again in the senior year of high school (greater detail), when the 1st of the credit card applications start coming.


When seconds count...the police are minutes away.
User currently offlineUH60FtRucker From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1747 times:

Quoting Pope (Reply 2):
EDUCATION BEGINS AT HOME.

That's a good point... but what do you do when the average home has poor family finances?

You'd have the dumb teaching the dumb. And the problem never gets solved.

I agree the schools are over tasked, but this is an important issue that needs to be addressed. And someone needs to teach America's youth how to be disciplined when it comes to money. We simply cannot rely on parents to do it all. And hopefully, as I suggested, 4 years of this stuff... SOME of it might sink in!

-UH60


User currently offlinePope From , joined Dec 1969, posts, RR:
Reply 6, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1739 times:

Quoting Fr8mech (Reply 4):
I'd go a step further and require a basic economics class (supply/demand, diminishing returns, taxation models, etc) along with finance and accounting.



Quoting UH60FtRucker (Reply 5):
I agree the schools are over tasked, but this is an important issue that needs to be addressed. And someone needs to teach America's youth how to be disciplined when it comes to money. We simply cannot rely on parents to do it all. And hopefully, as I suggested, 4 years of this stuff... SOME of it might sink in!

Just playing devil's advocate - if you guys are proposing adding classes to the middle or high school curriculum, do you suggest that the school day should be extended or that other required classes should be cut? If the answer is neither then should electives like art and PE be eliminated to make room for these worthy classes?

I submit that the education system in the US is completely failing. A couple of years ago I was at a pizza buffet in a small town in Texas. Three colleague and I had stopped there for lunch. The total was something like $17.89 and I handed the clerk my credit card. This young lady looked to be 16 or 17. She quickly entered the amount in the credit card machine but missed the last digit (she entered $1.78) and hit enter to confirm the transaction and it immediately approved. She was terrified. I said well just void it out and redo it. She said that she needed manager approval for that and he was out for the next half hour.

I suggested she just run a second transaction for the difference and she looked at me as if I was talking Chinese. She said, how do I figure that out? So here we have a person in high school who can't even figure out how to use addition or subtraction in every day life. I wonder how many more are out there. Before we worry about finance, our kids need a basic understanding of mathematics.


User currently offlineUH60FtRucker From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 7 months 1 week 2 days 4 hours ago) and read 1732 times:

Quoting Pope (Reply 6):
Just playing devil's advocate - if you guys are proposing adding classes to the middle or high school curriculum, do you suggest that the school day should be extended or that other required classes should be cut? If the answer is neither then should electives like art and PE be eliminated to make room for these worthy classes?

The school year should be at least 240 days long. 180 is totally unacceptable.

I don't know about extending the day - when I was in high school (I graduated 2001) it was like 7:30-3:30. That seemed fine. Especially since there was after school sports.

Quoting Pope (Reply 6):
So here we have a person in high school who can't even figure out how to use addition or subtraction in every day life. I wonder how many more are out there. Before we worry about finance, our kids need a basic understanding of mathematics.

Oh trust me, I completely understand.

As the only person in my unit to have an Economics degree... I pretty much because the default finance officer. I have to help out with the Unit's finances, and also individual soldier's finances.

A lot of times I help advise them on how to get started on mortgages, loans... and especially debt reduction and refinancing. I was amazed how many young privates didn't know how to keep a checkbook ledger!

Luckily the Army makes a lot of these classes mandatory, but it's still extra work for me on an already busy schedule. A little help from the schools before they got to me, would be greatly appreciated.

Speaking of work - I got to go! Pick this up later tonight!

-UH60


User currently offlineN231YE From , joined Dec 1969, posts, RR:
Reply 8, posted (7 years 7 months 1 week 2 days 3 hours ago) and read 1720 times:

YES!

When I was in high school, I took a finance class. We had a good talk with the teacher, who stated how poor the education system was, and said in his outspoken self that finance should be a required class for every student.

Who gives a crap about something that happened 3000 years ago and the styles of Pharaohs' hats and blah blah blah...what children really need to learn is basic finance, as it will affect their entire life.


User currently offlineLTBEWR From United States of America, joined Jan 2004, 13169 posts, RR: 15
Reply 9, posted (7 years 7 months 1 week 2 days 3 hours ago) and read 1716 times:

In an ideal situation, schools should have classes at all levels as to basic economics, use of credit including credit cards and loans; personal finance and banking, including savings and checking accounts. Schools are already cutting out many desirable programs due to time limits, budget limits and government mandates, so adding such programs may not be practical. There are also limits as to what schools should and can teach, and where that is the duty of the parent/parents.
Parents who used to be the basic teachers in these areas over the years have chosen not to discuss family finances with their children for privacy reasons nor do they have the time or inclination to teach anyway. Some don't even understand such issues themselves and would be bad teachers anyway. Because of that, many children never learn financial responsibility, are susceptible to easy credit, never learn how to even balance a checkbook or make good consumer decisions. Lives are also much more complicated than a generation ago as to credit access, that individuals must take personal responsibility for their retirement funding and so on.


User currently offlineJaws707 From United States of America, joined Aug 2001, 708 posts, RR: 1
Reply 10, posted (7 years 7 months 1 week 2 days 3 hours ago) and read 1695 times:

Another issue that ties into this is that our society is based on a very short term outlook and too many people want everything at once.
For example think about this case...

Lets look at a grade school teacher who just graduated from college. The average student graduates with $18,000 of debt. So lets assume this person is average. Also many college graduates like to buy a new car within a few months of graduation, so lets assume the new car cost $20,000 (simple Ford or Honda.) Mostly financed of course because the recent graduate probably has no money. Most grade school teachers I know make around $30,000 when they first start teaching. If the person is living at home, then they can at least save some money that way, but lets assume they have an apartament with a couple of roommates. What I am getting to is that this scenerio is a recipe for disaster. The person tries to instantly have a great lifestyle, with going out all the time and a couple of vacations thrown in there along with the new car and new apartament, but their income does not support this. This person can't save much money. How are they ever going to save the 20% down payment for a house?

Something to think about...


User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Reply 11, posted (7 years 7 months 1 week 2 days 3 hours ago) and read 1695 times:

Quoting Pope (Reply 2):
I agree with the conclusion that Americans are poorly equipped to make basic financial decisions. However, I have a problem with adding yet another task to schools which already do a generally poor job teaching what they are already covering.

Valid point, however if the parents are not educated on the matter, then the kids need to learn it somewhere. What you're doing with your daughter though is great. If only more parents did that instead of spoiling their kids rotten...

Quoting Pope (Reply 6):
Just playing devil's advocate - if you guys are proposing adding classes to the middle or high school curriculum, do you suggest that the school day should be extended or that other required classes should be cut?

My high school required that I take a fine art credit. Scrap that and sub in basic finance, as much as I'm for education in the fine arts, teaching kids basic finance skills will be much more beneficial to them.

Quoting Pope (Reply 6):
So here we have a person in high school who can't even figure out how to use addition or subtraction in every day life. I wonder how many more are out there. Before we worry about finance, our kids need a basic understanding of mathematics.

Sad but true. Our schools do a horrible job when teaching mathematics, it's just down right embarrassing.


User currently offlineFr8Mech From United States of America, joined Sep 2005, 5598 posts, RR: 15
Reply 12, posted (7 years 7 months 1 week 2 days 3 hours ago) and read 1692 times:

Quoting Pope (Reply 6):
Just playing devil's advocate - if you guys are proposing adding classes to the middle or high school curriculum, do you suggest that the school day should be extended or that other required classes should be cut? If the answer is neither then should electives like art and PE be eliminated to make room for these worthy classes?

Hell, I think school should go year round. With appropriate breaks throughout the year to change the monotony a little. This August to May thing is annoying at best.



When seconds count...the police are minutes away.
User currently offlineUSAFHummer From United States of America, joined May 2000, 10685 posts, RR: 52
Reply 13, posted (7 years 7 months 1 week 2 days 3 hours ago) and read 1686 times:

This absolutely should be taught in schools...probably as like a one semester or one year (depending on what scheduling system your HS used) course...something could be dropped in order to make room for it...Since Im kind of a pragmatic person, I'd probably dump one year of English class (we had to take it all 4 years)...reading Shakespeare, etc. wont get you anywheres in life (except if you're on Jeopardy! and the category is "Shakespeare"), but learning how to do personal finance is an important life skill...


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