Friday, June 14, 2013

What Schools Don't Teach Our Children About PERSONAL FINANCE ... It Matters A WHOLE LOT

Here's one of my favorites --- With all thy getting, get understanding.

In other words, work hard to know both the what and why of things.

That said, it's also true that many times understanding that we don't know what we need to know is much more important than knowing what we do know. And not knowing that we don't know what we don't know is a real problem. Personal financial knowledge in our younger years is one of those troublesome "unknown unknowns."

To sum it all up in admittedly awkward fashion, all too often in our own personal financial decisions we don't know what we don't know but need to know and would benefit greatly by knowing, if you know what I mean.

We go to school from K-12 and then many of us attend and graduate from technical school and/or college as well. In the process, years go by and we begin taking responsibility for our own financial decisions and affairs. In turn, those "financially uninformed" decisions can and do impact us, favorably or unfavorably, for the rest of our lives.

Things such as credit cards, student loans, car loans, home purchases, home mortgages, home equity loans, 401(k) choices, including whether to contribute, how much and how to invest those contributions and so forth, all come to mind.

So how much relevant personal financial "education" are we getting from our schools as we're being taught algebra, calculus, geometry and trigonometry? Zip, zilch, nada.

And we're getting all this nothingness in a most important topic while the "government" spends approximately $12,000 annually during our K-12 years. Yet personal finance isn't taught. How ridiculous is that?

Why Teens Need to Learn About Personal Finance tells the story of the "missing education" that very much needs telling:

"Financial education needs to take place all the way from grade school through high school.

Grade schools are doing it right already. They teach kids about money and how to shop and make change, which is age appropriate. After fifth grade, however, personal finance is forgotten. Kids turn to algebra and geometry and never get back to money. That's a problem.

I've worked with 20-somethings in my area who are high-school graduates, and I was shocked at how little they knew about basic finances. They had credit cards but no idea how they worked. They didn't know about savings accounts, bank accounts or fees.

Many of these young adults have a lot of credit-card debt, but they don't understand that making just the minimum payment barely pays off the current charges, leaving the balance to keep growing. They don't know what a 401(k) is, and don't understand that taking advantage of a company match is basically like getting free money. They don't recognize that they need to start saving now.

My children's high school asked me to look over some of the books for a financial-literacy class. They were old-fashioned and not engaging. . . .

The class did address debt but not student loans, which may be the next mortgage meltdown. It is really important for teens to understand student debt, how it works, and how it can be paid off—and to understand these things before they go to college. If they really understood everything up front, they might choose a different school or be willing to compromise on their choice.

For parents—the topic of money is almost like sex—they never want to talk about it with their children. They may be uneducated themselves, or they may not want their kids knowing how much they make. But parents need to teach their children from a young age how to handle money.

Personal finance, like any skill or language, is easier to learn and internalize the younger a child learns it."
Summing Up
I know that personal finance wasn't taught when I attended school.
I also know that sometimes the school of hard knocks, aka personal painful experience, can be augmented in a meaningful and wonderful way by preparing our youngsters not to make the same money mistakes most of us have made. We learned but we learned late and paid far too much for the experience based financial lessons we received.
So just because we oldsters never learned about finance in school, that doesn't mean that we don't NOW know through experience that our education was missing in one very important respect --- that being a foundational understanding and appreciation of personal financial matters.
That's because we now know what we didn't know but now wish we would have known.
Because had we known way back then what we know now, many of us would be in much better position today to enjoy a comfortable, if not financially worry free, period of old age.
So why don't we give our kids and grandkids the opportunity that we never had? Even though they may not yet know what they don't know, we sure do.
That's my take.
Thanks. Bob.

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