Teaching personal finance in public schools

[REWahoo]

I was not aware any public schools taught personal finance courses. Looks like several do according to this:

Tennessee is one of only 13 states in the country that requires students take a personal finance course to graduate from high school.

"We're the only state that does a systematic, comprehensive approach starting in first grade, and going all the way up," says University of Memphis economist Julie Heath, who created the program. "I think we're changing lives."

I think this is a great idea and would love to see more states require it.

Never too early! First-graders learn money skills - Money

 

[EO 11110]

This is critical information that is being left out. While lesser subjects are mandatory. It should be mandatory. It is so obvious that it makes me think there's something somewhere that doesn't want it to be taught.

 

[Nords]

I was not aware any public schools taught personal finance courses.

Our local high school squeezed it into some sort of "life skills" two-week module... how to balance a checkbook and how to handle a credit card. The class had to be passed to graduate, but I don't think there was an actual test or even a quiz-- just show up and participate. Our kid found it most amusing; she was doing as much teaching on the breaks as the teacher was doing during the class.

I helped a field trip and ended up sitting next to the recent college grad who'd been teaching that class. She was able to balance a checkbook and handle a credit card, but her skills didn't go much further than that. There were the usual questions about ER but she was a lot more interested in the Amway MLM possibilities.

 

[F4mandolin]

Yet another reason I am hoping to get out of teaching this year. I really just don't have any confidence in the education system as it is. The priority is to get get as many people as possible into (for example) upper level math classes. How many jobs are there for people with good calculus/trig etc skills? Yes, I know there are jobs out there.....but for 95%+ of people.... The push is to get everybody into college whether they want to or not. Vocational skills? It doesn't "look good"....so it isn't considered. Those kids who really just don't have any interest in going on in education......well tough...they are going to go to college anyway. Ahhh, I can go on and on.....Pretty soon they are going to up the pressure/requirements so far that they are going to lose more teachers. Go ahead and up the pressure/requirements....pay more and see how many more people will get into the field. Here in the UK they have the same push to get into "Uni".....but 25% of the applicants CAN'T get in...not enough places for them. If they would only make me King......hmmm, on second thought I don't think I would like the pressure of that either.

 

[Emeritus]

I spent many years as an academic in a Consumer Economics department, where we did the research that supported such courses. Under Reagan the research funding for consumer economics disappeared and eventually the university abolished the department. It became right wing propaganda that you should turn pensions over to individuals to empower them and avoid that nasty "paternalism". All it really meant was you sent sheep to the financial slaughterhouse. It's the same stupidity that interprets "every child can learn" to mean "every child can have test scores improved"
When Slot machines were proposed I suggested a course on SLOT MACHINES ARE FOR IDIOTS
Every time I see an ad for the state lottery I want to scream

 

[WhoDaresWins]

I didn't know how to write a check and balance a checkbook until I was in college (age 18). And I was shown how to do this by a lady at the Chemical Bank in NYC where my Dad and I opened my account at the beginning of freshman year. And a credit card? I didn't have one until maybe age 24 or so....when I was married and working and husband was a captain in the Army on active duty and we had already bought a house. We were both green in the finances department...and remained so for many years.
I think personal finance teaching should begin at least by sophomore year in high school. Sex education begins even earlier these days (I think) and personal finances are at least equally important.
Don't ask about sex education in my day either....it was taught in an all female gym class by the lady gym teacher and was almost exclusively related to feminine hygiene products.

 

[skyvue]

It seem ridiculous to spend time learning algebra but not personal finance.

It really goes beyone high school. I graduated with an Industrial Engineering degree. I had classes in advanced chemistry, physics, thermodynamics, economic "theory", etc.....and despite working as an engineer initially in my career haven't used any of what I learned in those classes in real life.

Meanwhile, the day I graduated from college, I immediately had personal finance decisions facing me and no education on the topic to deal with those. What did I do? Bought a brand new sports car for $16K even though my initial salary was only $28K! About 25% of my take home pay went to my car payment and car insurance......Dumb!

 

[Walt34]

It seem ridiculous to spend time learning algebra but not personal finance.

Amen!

One of the most practical/useful classes I took in HS was one about personal finance. It was optional, and labeled "Business Something" but it was where I learned the difference between a savings and checking account, the significance of compound interest and the like. No one had ever told me anything about that stuff.

 

[travelover]

What a bunch of kill joys. How can a honest, hardworking businessman offer a credit card with 79% interest to a graduate of a personal finance class?

 

[Mulligan]

In my state it is a required semester course. As an educator, I noticed that a lot of students recieved value from the course, but far too many dont internalize what they learn. In their mind they treat it like a theoretical class with no impact on their current daily life. That is unfortunate, because personal finance can be a very interesting course of study. Education can only take you so far, you have to be willing to put the knowledge into practice, too.

 

[jimnjana]

In my state it is a required semester course. As an educator, I noticed that a lot of students recieved value from the course, but far too many dont internalize what they learn. In their mind they treat it like a theoretical class with no impact on their current daily life. That is unfortunate, because personal finance can be a very interesting course of study. Education can only take you so far, you have to be willing to put the knowledge into practice, too.

For many of them it may be theoretical for they don't have anything besides their allowance perhaps part time job income to manage. Hopefully, the lessons are something they will recall as their financial life matures.

 

[Mulligan]

I certainly hope that is true, as it may take years for it to all play out. Self discipline and contol of wants versus needs, still come into play even if you know all about interest rates, budgeting, preparing for retirement, etc. I knew all about budgeting, etc. growing up, but still fell prey to the camaros, and IROCs of my day just because I could "make the payment". If someone would have threatened to beat me up if I signed that loan, I would be a lot wealthier person today!

 

[GregLee]

It seem ridiculous to spend time learning algebra but not personal finance.

Not to me. I loved algebra in high school, and it's hard to imagine how anyone knowing elementary algebra would have problems understanding how to balance a checkbook or figure interest rates and mortgages. Maybe algebra courses in high school should spend a week on personal finance applications, if they don't already.

 

[Meadbh]

It seem ridiculous to spend time learning algebra but not personal finance.

Not necessarily. Algebra is a basic mathematical discipline which can be applied to everything from calculating the breakeven cost of a purchase to the dose of a medication. I think it's a pretty fundamental foundation.

 

[Walt34]

I certainly hope that is true, as it may take years for it to all play out. Self discipline and contol of wants versus needs, still come into play even if you know all about interest rates, budgeting, preparing for retirement, etc. I knew all about budgeting, etc. growing up, but still fell prey to the camaros, and IROCs of my day just because I could "make the payment". If someone would have threatened to beat me up if I signed that loan, I would be a lot wealthier person today!

Part of it too is the process of maturing. When I was 25 I spent $3,900 on an airplane that cost $1,500 a year just to own, before I put any fuel in it. I had that airplane for two years and for what I spent on fuel, insurance and maintenance alone I could have bought a house.

But it was also the fulfillment of a childhood dream, that dream being able to learn to fly. I loved every minute of it, and even knowing what I know now, I'd probably do it again.

I had time then to recover from what many would consider a foolish expense, and I knew it. Also, I was single, and the only one who would suffer from my mistakes was me and I knew that too. As I put it to one guy at work then: "I'm single and have no responsibilities beyond coming to work, doing my job, and paying the rent on time. If I don't do this now I may never have another chance."

 

[Nodak]

I knew all about budgeting, etc. growing up, but still fell prey to the camaros, and IROCs of my day just because I could "make the payment".

Me too, I once bought a 12 year old Jaguar only to realize, about 3 months later, that I didn't make enough money to maintain it. Sold the Jag and bought a Volkswagen.

 

[Major Tom]

But it was also the fulfillment of a childhood dream,

That statement alone justifies it in my mind Walt. FI is a very worthy goal, which many of strive for as adults, but I don't think any of us spend our formative years dreaming of it; we dream of far more inspiring things.

What is life if you don't get to fulfill a dream or two along the way?

 

[samclem]

There should be a course, and it should go well beyond managing a checkbook. It would do wonders just to expose kids to how compound interest works (saving and borrowing), typical expenses for various things in the real world, a very brief look at taxes and retirement savings vehicles, etc. Presented the right way, it wouldn't have to be drudgery. If the light came on for 10% of students it would be super.

One problem would be pushback from parents. Any course worth doing would enable Junior to identify dumb things being done by Mom and Dad. Mom and Dad won't enjoy the ensuing discussion, and they'll complain to the school.

 

[Moemg]

I think a great course for High School kids would be on the danger of student loans . I have seen so many young adults strapped with horrendous student loans because they borrowed whatever they could without thinking about the repayment . Most of them assume they will instantly get great paying jobs and the loans will be no problem and then reality occurs .

 

[Free To Canoe]

I didn't know how to write a check and balance a checkbook until I was in college (age 18). And I was shown how to do this by a lady at the Chemical Bank in NYC where my Dad and I opened my account at the beginning of freshman year. And a credit card? I didn't have one until maybe age 24 or so....when I was married and working and husband was a captain in the Army on active duty and we had already bought a house. We were both green in the finances department...and remained so for many years.
I think personal finance teaching should begin at least by sophomore year in high school. Sex education begins even earlier these days (I think) and personal finances are at least equally important.
Don't ask about sex education in my day either....it was taught in an all female gym class by the lady gym teacher and was almost exclusively related to feminine hygiene products.

Great thread. One has to get their financial and sex educations "on the street" (there has got to be a punch line in here somewhere). I guess that is how it goes with taboo subjects.
Years ago I rented a house from a highschool teacher who taught a "finance". Said that it was hard to keep the students interest.

Free to canoe

 

[Mulligan]

Me too, I once bought a 12 year old Jaguar only to realize, about 3 months later, that I didn't make enough money to maintain it. Sold the Jag and bought a Volkswagen.

Nodak, that stuff is kind of funny looking back on it. I was clearing $955 a month my first year teaching, but had a $250 car payment. Insurance, gas, car property taxes, and payments were eating up over 40% of my take home pay, but I still had money to pay the rest of the bills and buy beer! One month, I remember spending $450 for new HI FI VCR when they first came out. Half my paycheck! INSANE, but I paid cash for it I remember.

 

[Nodak]

Nodak, that stuff is kind of funny looking back on it. I was clearing $955 a month my first year teaching, but had a $250 car payment. Insurance, gas, car property taxes, and payments were eating up over 40% of my take home pay, but I still had money to pay the rest of the bills and buy beer! One month, I remember spending $450 for new HI FI VCR when they first came out. Half my paycheck! INSANE, but I paid cash for it I remember.

The fact that I paid cash for stuff is what saved me. It kept me from buying too much. If I had used credit cards I'd still be making payments.

 

[Alan]

When I were a lad growing up in England we were taught how to save for things we wanted and learned about interest rates at "junior school" (the 4 years between ages 7 and 11). I'm sure it is not like that now.

We were enrolled in the "Post Office Savings Bank" and issued with a pass book. Each Friday a teacher would man a table and everyone was encouraged to bring some money to deposit. The school would hold the pass books and once a month the interest would be added. I remember I used to get 1/- (1 shilling) from my mother to deposit. At the end of each term we were given our pass books to take home and it was up to us then to withdraw money if we wished.

It was a great way for kids to save for Christmas and/or for the summer holidays. When I left junior school I, like others, was in the saving habit and the Post Office, or other high street banks, would issue free savings boxes to kids for their savings accounts. You could put money into the box and not be able to get it back out. Periodically I or my mother would take it to the bank for them to open with a key, count and deposit the proceeds.

I don't remember any personal finance courses at school, but a required course for my engineering degree was Accountancy but no personal finance courses were on offer.

 

[pb4uski]

It seem ridiculous to spend time learning algebra but not personal finance.

<snip>!

Agree, but perhaps we could do both. Just add two assignments to that algebra class.

Have one assignment that a student charges $3,000 on a credit card. The credit card charges 24% APR and the student makes twice the minimum payments (whatever they are). Compute 1) how long it will be before the $3,000 is paid off and 2) how much interest is paid on the $3,000.

Second assignment is student graduates at 18 and begins full-time work, beginining at $10 per hour, receives 4% annual raises during the next 20 years, saves 10% of what they earn each year and the savings are invested at an 6% return. How much will the student's savings be in 20 years (at age 38)? [I get $107K - hope I did the math right ].

Both are simple math, and might be pretty eyeopening.

 

[Brat]

Interesting comments...

My SIL teaches in a very strong public high school. He has more than enough knowledge to teach personal finance but in his school the kids who need the information wouldn't enroll in the class because it won't earn kudos on the transcript for college. The other issue is that schools don't have the resources for many electives that the parents don't demand.

I agree with pb4uski that many concepts could be taught in mathematics. Many students claim that their education doesn't relate to 'real life', but that certainly does.

It may be up to programs like Scouting or Boys & Girls Clubs to put together personal finance classes.