Finance Question #3 - Did grade school (K-12) teach you anything about money?

The missing subject...

I think that it is safe to say that most grade schools are required to cover the following four fundamental subjects; reading, writing, math, and science. I also think that most of us can agree that learning the basic fundamentals of these four subjects are essential for navigating through this thrill ride we call "life." Furthermore, we can all probably agree that it would be extremely difficult to navigate through life without learning the basic skills of reading, writing, adding/subtracting numbers, and understanding basic scientific laws such as gravity. But perhaps there is one other life critical subject that is missing in what seems to be the majority of our grade school systems.

The national crisis

A study conducted by the the Council for Economic Education (CEE), a New York based organization that promotes financial literacy in elementary and high schools, conducted a study that revealed only 17 states that require a personal-finance course for a diploma (Bresiger, 2014, para. 2). At a bare minimum, students exiting high school should at least have been taught how to budget, save, and spend money wisely. But far too many of our grade schools fail to teach this subject. As a result, a lot of our young people will embark on a lifelong thrill ride of money worries. Perhaps the 2008 real estate crisis would not have hit our economy as hard if our young people were not signing up for mortgages that they never understood in the first place.

The worst part about this epidemic is that in a lot of households the lack of financial literacy is passed on from generation to generation because most of our parents were never taught the basics of personal-finance in school. The holistic picture is that the entire economy suffers because personal-finance is not a required subject in most grade schools. A study conducted by the Financial Industry Regulatory Authority's Investor Education Foundation revealed that high school students who are required to take personal-finance courses go on to have higher credit scores and lower debt delinquencies (Schwartz, 2016, para. 11). Another study conducted by CEE revealed that 81% of students miscalculate their student loans and the length of time it will take to pay them off.

To make matters worse, more than 80% of teachers in the study conducted by CEE said that they would not be confident in themselves to lead personal-finance courses.

I believe that Nan Morrison, president and CEO of the Council for Economic Education, said it best when he stated that "To be successful, most kids don't need to learn about collateralized debt instruments, but they do need to know how to open a bank account, how much they need to save each month to reach their goals and, if they borrow this amount of money, how much money they will need to earn to pay it back." (Schwartz, 2016, para. 10).

Not surprisingly, the few states that do incorporate personal-finance courses get their high school graduates off to a stronger financial start in life. The result is that students develop better credit behaviors in states where personal-finance courses are required, where the teachers are formally trained in this subject, followed by required testing for the students to demonstrate their comprehension.

Back to the original question

Did grade school (K-12) teach you anything about money? This question stems to the moral of the story, and the moral is that financial trouble starts early in life. Finance may not be everyone's favorite subject, but like it or not we all have to deal with money in some form or another. Why then is personal finance in most grade schools not deemed as important as reading, writing, math, and science? I am curious to know what you think so please feel free to comment and share your perspective.

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references

Schwartz, S (2016). US schools get failing grade for financial literacy education Retrieved from https://www.cnbc.com/2016/01/28/us-schools-get-failing-grade-for-financial-literacy-education.html

Bresiger, G (2014). High schools are lacking personal-finanance education. Retrieved from https://nypost.com/2014/05/11/high-schools-are-lacking-personal-finance-education/