Courtesy of edu.google.com
Nowadays, kids do not receive as much interesting and important information about the adult world. They are growing up unprepared for various inconveniences and difficulties of modern society. One of the biggest pivots is managing personal finances which is hard for some adults let alone children who suddenly become adults.
Most schools seem to offer diverse sets of courses and teachers are professionals, but the vast majority of schools simply do not have anything to offer when it comes to teaching children to control how they spend money, manage their budgets, and avoid debt. The latter is a pivotal topic since surviving and living a comfortable life in modern life depends on making debt and getting rid of it in a timely manner.
For example, payday loans can help you to pay bills and purchase something very important, but taking them without understanding consequences is a path to negative debt that can snowball out of control without proper management.
Modern kids must learn about credits, credit scores, budget management, paying bills and taxes, and the importance of avoiding debt. These are crucial knowledge bits that actually help to survive in the adult world.
The situation is changing. The process is very slow. WE can and should make it faster. About two decades ago, only Illinois required its schools to teach children about taxes and personal finances in general. In 2017, the amount of states demanding schools to offer such lessons was increased to 17.
Is It Really Important?
For some reason, many people believe that personal finance is not a pivotal core class that should be taken by every single high school student. It is hard to argue that it is just as critical for a student as mathematics, language, physics, chemistry, and history. There should not be personal finance exams, but the importance of such knowledge should not be underestimated as well.
Over 85% of school teachers consider personal finance important and that we should implement simple yet efficient testing to make sure that children know how to survive in the “real world”.
Take a look at some stats:
Student debt is at its all-time high with $1.4 trillion owed in total by people in the US.
- Consumer debt is creeping closer to mortgages.
- 40% of millennials cannot deal with debt on their own.
- Each 2nd millennial cannot save for their future.
- The vast majority of students who use credit cards do not know fully how debt works.
- About 43% of millennials borrow money from payday lenders and prefer rent-to-own stores.
The latter is quite troublesome. Payday loans are great to quickly pay bills or cover other forms of immediate debt, but they should not be used as a primary source of credit.
Payday loans should be used efficiently and correctly in order to avoid debt. The problem is that high school students do not know about it and spend money recklessly without fully understanding how to survive on their own.
College students can learn more about managing finances since most colleges offer business lessons. However, roughly 16 million young people enter the adult stage of their lives without college education meaning that they must learn about personal finance.
Personal Finance in Schools and Potential Problems
The first problem is delivering the knowledge to students. Debates are still being held on the form of lessons and efficient methods of teaching. Another problem is financial illiteracy of teachers. Recent studies showed that only 20% of teachers feel ready to teach how to manage money, debt, and taxes.
Implementing personal finance courses will require us to train more specialists. This means that we must partially overhaul the very system of education and add more personal finance lessons for college students who will later become teachers.
Students in colleges do receive some knowledge on personal finance management but this knowledge is very limited and insufficient. There must be standards that will ensure that our teachers can provide consistent informative teachings for their students.
There is also a debate on whether personal studies should be taught in school. Some believe that this is knowledge best taught at home by parents. However, more than 70% of parents feel either incompetent or uncomfortable talking to their children about money. This means that there is no way that children can be taught at home.
The generation gap is another problem. A lot of baby boomers are not prepared for retirement as recent studies showed. This generation does not have necessary knowledge to teach the new generation that is growing up. Millennials are bounded by debt also do not have (on average) necessary skills and experience to efficiently teach their children.
Classes that Should Be Taught
The last question is the volume and form of lessons. Which classes should be prioritized? Should we focus on practical moments like filling out forms and learning to work with documents? Should we emphasize the importance of money management in general and teach how to spend, save, and borrow money? This is a very dark alley.
However, we have some classes that are being developed or already implemented:
- Saving money in banks;
- Investments, planning, and saving;
- Interest income;
- Creating assets;
- Managing credit and debt;
- Everything about credit scores;
- Sources of income;
- Paying taxes;
- Insurance and its forms.
We need more lessons and we must focus on managing debt. Payday loans and credit cards can be quite useful when used correctly. Taxes and fees will be less burdensome if handled properly. Saving will be easier if spending is reduced reasonably.