As Americans, we expect our school experience to prepared us for life outside the bubble of our parent’s protective reach. We must know how to do everyday things, like change a tire and balance a checkbook. Some schools do have these life lessons as a required part of their curriculum, but sadly, that’s not always the case.
Seventeen states require personal finance courses, but this often isn’t enough. In most of those schools, it’s a simple semester-long class that might help teach kids how to budget, but the fact that it stops at the basic level education and is only required in less than half the states is difficult to understand.
According to a survey from Equifax, 90% of Americans want personal finance classes to be taught at the K-12 level and for it to be a requirement to graduate.
The poll revealed something else. When asking surveyors about their personal literacy, Americans tend to grade themselves on a curve, believing they have better-than-average financial literacy, but that’s not the case.
Every year, the Champlain College Center for Financial Literacy releases its Financial Report Card and it often doesn’t look very good. Nine states received a failing grade. 27 states scored a “C” or lower. When you look at the massive amounts of debt Americans are piling on, it goes to show how much we really know about financial stability.
Americans keep falling into the same traps, year after year, decade after decade. There are moments that are outside of people’s control. No one knows when the next big recession will hit, but very few seem to be prepared for such occasions, including personal emergencies.
When Equifax asked people where they got their financial education, only a dismal 14% replied that they learned from school. 40% reported their parents taught them. 13% learned by reading financial blogs like this one. 8% picked up knowledge from their bank.
That statistics don’t stop there. T. Rowe Price, an investment group, found that over half of all students who did take financial courses were not prepared for handling finances as an adult. A lot of it comes from confusion, as both schools and parents clash on what students need to learn. No consensus means a variety misinformation is being shared.
Stuart Ritter, who is a senior financial planner at the company, knows what it takes to get everyone on the same page.
“Over the years, we’ve found that financial education works best when schools and parents work together to help kids understand money matters. Even though financial education in both school and home have shown to be effective in preparing kids for ‘adulting’ responsibilities, it’s not perfect,” he said.
The disconnect might be a result of parents being reluctant to teach their kids about money, spending, and saving. In a lot of ways, kids grow up and start making and spending money before parents even get a chance to have that conversation. It should be ingrained with life lessons about money from a much earlier age.
“We know that many parents have some reluctance to discuss money matters with their kids and that, oftentimes, kids begin making, spending, and saving money before parents or educators have helped them understand how it works. An opportunity for parents and educators to have money conversations more consistently, sooner, and broaden the dialogue to include longer-term goals,” said Ritter.
The value of a dollar should be instilled in kids from the time they are able to handle chores by themselves. Rather than just buying them the toy they want, it can be made into a teachable moment that allows their child to get a better understanding of what it takes to earn the money, save, and buy what they want.
As they get older, incorporate broader realities that involve paying for their own car payments, insurance, and other necessities.
For now, financial experts hope to get a bill passed that requires financial education as a requirement in all 50 states.
