It’s not often that the United States takes their cues from the UK, but this might be an instance where they should take doing so into serious consideration. According to TIME magazine, the UK is going to be making personal finance studies a requirement in their school system. The article by Dan Kadlec calls it a "bold new rule"; though isn’t this long overdue, if not sad, that it’s getting to the point where high schools need to teach what many would consider "basic" life skills to our kids?
While a nationwide effort is unlikely, and probably unnecessary, America should consider following the UKs example here on a state level: Virginia, Utah, Missouri and Tennessee have already done so by implementing similar personal finance curriculum.
While our schools already teach math, which is certainly a subject that not every parent can administer to their own child, it’s getting to the point in our society where parents are no longer able to properly inform their children about personal finance, because they themselves are nearly completely oblivious to it.
Though the level of financial prowess varies greatly from person to person, the overall awareness and understanding of basic financial concepts like saving money, mortgages, retirement accounts and even taxes is incredibly low, if not non-existent.
If children are being born with parents, who have no understanding of these topics, and are themselves ill-informed about their own financial state, the sad truth is that it will be left up to the school system to give those kids an opportunity to live fiscally sound and responsible lives. Whether or not the school could deliver on something like that is yet to be seen; though it’s painfully evident that as a society, we need some form of guidance and authority when it comes to even the most basic financial principles.
- Budgeting — The average US citizen either has no understanding of what it means to make a budget, or they see no need for doing so. Whether in the position of being parents or school teachers, we need to teach the practical steps and process involved in taking a paycheck and allocating certain parts of that paycheck for certain expenses, savings and yes, fun.
- Savings Accounts — Because of the lack of the ability to budget, many people don’t have money left over to save. Expenses can come up at surprising times and hit all at once. When they do, having money set aside to help pay those unforeseen expenses is crucial. If that money doesn’t exist, that probably means credit card debt and higher bills the next around.
- Credit Cards, Debt and Interest — If there’s one thing the American consumer does understand, it’s a credit card swipe. All we know is that we get to take something home and pay for it later. Unfortunately, that’s usually where the understanding drops off. Being in debt and accumulating interest is a science that we need to be better informed about as a society. Though this can be covered in economics classes, the practical application is what needs to be taught specifically. The consumer needs to be more aware of what is actually happening when they swipe a credit card.
As a culture, we’ve found ourselves in a form of financial quicksand, where people carry large amounts of personal debt, little or no savings accounts and have no real plan for retirement. Reversing this trend is complex and solutions vary, as not everybody is ill-informed; yet we do need to consider giving our young people a chance to make better financial decisions than we have made over the past 20 years.
Though the school system isn’t a magic fix, they can be part of the solution.
It’s high time that America starts informing their children.
Jenny Sampson is a professional blogger that enjoys providing consumers with personal finance advice. She writes for TitleMax.biz, a leading Title Loan company offering bad credit loans