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Improving Middle Class Finances Through Education

Tax breaks, savings credits, and fabulous graphs of the Presidential tax plans are all the rage, but I think the root cause of the money management problem in our country is the complete lack of financial education.

Our schools don’t teach a comprehensive financial program (or anything in most schools), and many parents don’t teach their kids either. Some parents would love to teach their kids but because they don’t know how to manage their own money, they aren’t empowered to do so. It a vicious cycle, but it’s a nationwide problem.

It was great timing that a group of writers are answering the following question today:

“What is the single most important initiative that the next administration should undertake to improve the economic health of the U.S. middle class?”

The great thing about financial education, is that it doesn’t have to be a politically charged topic. Either party could pursue it, including our middle class VP candidates [1]. The downside is that it’s a long term plan. Education of today’s youth won’t make changes overnight. It will however, empower the youth of today to make a difference in the future.

Kids Personal Finance Stats

Looking for proof that kids today need a better financial education? Look no further than the financial literacy scores released earlier this year (taken by High School seniors):

  • 48%: Correct answers to the questions!
  • Only 40% correctly answered that they could lose their health insurance if their parents become unemployed.
  • 40% correctly said that paying only minimum on a credit cards will pay more in finance charges than paying the balance in full.
  • A shocking 17% correctly answered that stocks will likely yield higher returns than savings bonds, savings accounts, and checking accounts over the next 18 years. (There has never been an 18 year period where that didn’t happen.)

You can download a copy of the survey and see all the results at Jump$tart Coalition.

Current Personal Finance Requirements

There are lots of fantastic books, teaching tools, and articles about teaching kids about money. But who is requiring the learning? Here’s a look at the individual state requirements per Jump$tart:

  • 3 states: Require 1 semester of personal finance class.
  • 17 states: Require personal finance material incorporated into another subject.
  • The rest: No requirement!

Money Management Curriculum

I would love to see a comprehensive money management curriculum. Not just a semester in high school, but education at all levels. Money management is learned over your entire life, and it evolves. Introduce the basics in elementary school, expand on the concepts throughout middle school and include a capstone course in high school.

Cons to Personal Finance Education

As with all pros, there are cons. Here are some typical ones that might come up:

Kids that don’t care. [2]
JD took a personal finance class and got F’s on all his papers, because he just didn’t care. Although, many kids don’t care about the other classes either.

Teachers aren’t equipped. [3]
Good point. Teachers probably aren’t the best qualified teachers on personal finance. Maybe we could look into volunteers or sponsor passionate personal finance people. I don’t have all the answers, but we shouldn’t let that stop us.

Resources for Teaching Kids about Money

What do you think? Am I right or wrong?

Check out how others answered the same question: