COMMENTARY | America has a personal finance problem. We spend too much money and don’t know how to invest wisely. When it comes to politicians, the problem is compounded. Cities are going bankrupt, our state governments struggle to balance their checkbooks, and our federal government is a case study in mis-spending. Washington wastes billions on defense spending and higher education while millions of citizens are unemployed and a sizable percentage of our population needs food stamps. And some legislators in Kansas have the audacity to suggest teenagers don’t need to learn personal finance in school?
Dear Kansas legislators who do not believe that personal finance should have its own required slot in the high school curricula: Let this high school economics teacher take you to school.
As an economics teacher and a Millenial, I know how important knowledge of personal finance is for today’s students. Old legislators, who came of age when jobs were plentiful and wages had real purchasing power, had the luxury of being able to learn personal finance as they went. If they screwed up, which many Baby Boomers did, it was easier to get back on their feet. And, at the end of the day, they had Social Security to rely on for retirement.
Boomers could own a car, a house, and raise and family without college degrees. Sometimes, they could even do this on one income! There were blue collar jobs that paid living wages, employers who paid pensions, and we actually put higher taxes on the wealthy to balance things out. You could go to college without taking out enormous loans, employers would actually pay to train their own employees, and individuals’ every misstep was not recorded forever online.
Today the economy is weaker, the job market is brutal, and you have to be better simply to get your foot in the door. Any shortcoming can be Googled by a prospective employer. And to get a good job you’ve got to jump through countless hoops, usually including free labor through unpaid internships.
It ain’t your grandpa’s economy. Legislators need to realize this. And so much has changed within the past 30-35 years that saying “they can just learn it from their parents” no longer suffices. Even if parents wanted to fully educate their teenagers on personal finance, how many things involving both the macro and micro economies are radically different?
Today’s teenagers will have to know about loans and interest rates, how to manage credit and credit scores, and be far more attentive to changes in the macro economy. They should know about factors indicating impending weaknesses in the job market, government spending, and the entire business cycle. They need to know how to invest wisely for their own retirements and for their children’s college education. Students need to know about the causes and effects of all types of inflation and unemployment.
There is no margin for error in today’s economy.
And, even without today’s heightened importance of economic and financial savvy, it can be hard for well-meaning parents to remember to cover everything. My own parents were accountants, meaning I got about as good a personal finance education as a kid could get. Still, since I did not know to ask, I was caught by surprise about some tax issues in my late twenties. I wish I had learned much more about personal finance when I was younger. And remember, this is coming from the son of two experienced accountants…and whose uncle and younger brother are also accountants.
Parents who think they can teach their kids all about personal finance are likely underestimating the task. The job should be left to trained, professional teachers who are able to research the entirety of the issue and are skilled at disseminating the information. They will know the up-to-date information and trends and not have to rely on “back when I got my first loan” memories.
Knowing about the economy and how to manage one’s personal finances is of vital importance. Not to bash other subjects, but I think that school districts throughout all 50 states should be able to find space in their respective curricula for a required Personal Finance course. With Economics a required course in many states, including my home state of Texas, where it is a one-semester class, it should not be difficult to add Personal Finance as a subsequent class. Juniors or seniors in high school could take Economics in the fall and Personal Finance in the spring. Remove one required elective credit and – voila! – space for Personal Finance!
We require foreign language and computer science in many states despite the fact that many students never come close to proficiency in any foreign language and already have thousands of hours of digital experience prior to starting school…so why not require they take a Personal Finance class, which is of much, much, much, much greater value?
Take it from this teacher: Personal Finance should immediately be made a required class for high school graduation.