Financial education for our young adults?

[JoeP]

It is interesting to me that adults, without even rudimentary financial knowledge, can unknowingly sign away their lives and put themselves and their families on a path on financial ruin. There are plenty of documented examples in this site, news stories, and even on Dave Ramsey's radio show.

I've often wondered why our school systems demand learning a second language -- sometimes starting at grade 7! -- but do not require even one year of study related to basic finance. Without exception, every graduate will be involved in financial exchanges, but will not necessarily need to employ their second language. And right after high school usually comes one of the most expensive financial transactions of that young adult's life: college.

Am I living in some sort of dream world when I propose that school systems should make mandatory classes in basic finance? I imagine equipping our young minds with the basics such as: interest, compounding, escrow, balancing a checkbook, insurance, amortization tables, lines of credit, balance sheets, budgeting, etc.

Can we agree that providing this subject would at least equip our young adults so that they have knowledge on-board when they entertain big financial decisions such as car loans, student loans, credit cards, and mortgages?

[disneysteve]

Our school district has a personal finance class in high school.

[JoeP]

Our school district has a personal finance class in high school.

Is this personal finance class required for graduation?

Does your school district require a second language for graduation? Ours does.

[disneysteve]

Is this personal finance class required for graduation?

I think so.

[EEinNJ]

Great idea! So great, it won't happen (generally). Teaching about money is like teaching "family values", people would be up in arms. An educated financial consumer is also the enemy of the credit card and banking industries.

[bjl584]

I've seen this come up before. When I was in high school there was no such requirement. I'm not sure about today.

It does amaze me though that students can solve complex Calculus equations but they aren't taught to balance a checkbook.

[disneysteve]

It does amaze me though that students can solve complex Calculus equations but they aren't taught to balance a checkbook.

Very true. If only education were actually about teaching practical skills that would be useful in life rather than arcane minutiae that accomplishes little more than preparing you to pass some standardized test.

Of course, on the flip side, one could argue that the practical stuff should be taught in the home. My daughter has gotten numerous formal and informal financial lessons. We've done our best to be good financial role models so that she can learn by watching us but I've also sat down with her several times for "formal" financial education where we've talked about checks, credit cards, savings, CDs, stocks, bonds, etc. My daughter has been balancing the family checkbook since she was 9 years old (she's 16 now). Actually, she hasn't done it lately but she absolutely knows how.

[JoeP]

Of course, on the flip side, one could argue that the practical stuff should be taught in the home. My daughter has gotten numerous formal and informal financial lessons.

What if the parents lack the proper knowledge? I know more than a few financially irresponsible parents who would be doing a great disservice to their children if they were in charge of teaching them about finances. I've even met people who don't balance their checkbook; they just somehow "know" they have enough in there.

If taught in school or home, the curriculum could employ "life simulator" software that runs through certain potential conditions based upon probability. Knowing what has been taught so far, run through a typical year: understand your income, apply for a loan, buy things, get car insurance, pay for utilities and food, maybe rent versus buying a home...and let the software give you a financial health report. Maybe you should have set up an emergency fund to address your roof leak. Maybe you would have been better off putting 50% cash down on the car as opposed to the no down payment gimmick. Maybe the rent-to-own wasn't a good idea when you had to take a pay cut.

[josetann]

I'm just glad I didn't take my dad's advice when it came to finances. I'd be in a whole heap o' trouble.

And we're trying to teach our kids about finances. Oldest is six, he knows how his allowance is divided up into spending, saving, and donating (we briefly touched on investing, but that's a lesson for another time I think). He can decide whether he wants to spend $5 on cake decorations or keep saving for a bike. BUT, I doubt we can teach him everything. It's been many many years since we've balanced a checkbook...should we teach him how when he's older, or teach our method (keep a cushion in the checking account, have an idea what's coming due, check the balance multiple times a week so you have an idea what's in there)? I think a young adult should do things a bit different...but then again the world keeps changing, so checkbooks may be obsolete by the time he'd need one.

[Barclay]

Fnancial and physical education both need more discipline. We are a country of bankrupt and obese people. It is disgusting.i

[moneybags]

It does amaze me though that students can solve complex Calculus equations but they aren't taught to balance a checkbook.

I went with DD to the bank last week to open a checking & savings account since she is heading off to college in 2 months. I asked the banker about ordering checks, and she told me that DD wouldn't need them. I think balancing the checkbook is going to be extinct as transactions all become real time. DD will just monitor her balance online & not need to keep a "checkbook" as we know it. For the time being, I can't imagine what she would write a check for. I'm sure there may come a time.

[disneysteve]

It's been many many years since we've balanced a checkbook...should we teach him how when he's older, or teach our method (keep a cushion in the checking account, have an idea what's coming due, check the balance multiple times a week so you have an idea what's in there)?

I would definitely teach him the proper way to do it. Just keeping a cushion in the account and hoping for the best isn't really a great system. I balance my checkbook every month and at least 2 or 3 times each year, I find errors that I never would have discovered had I not been going through the process. I'd also suggest that you start balancing your own account for just that reason. It only takes a few minutes and is quite simple to do.

I can't imagine what she would write a check for.

There are still plenty of things that either don't accept credit cards or, if they do, charge a fee for using one. Unless the convenience fees go away, checks will continue to be needed for those of us who refuse to pay uneccesary fees.