In an amazing twist of events it appears that teaching students from a school-based curriculum about personal finance isn’t working.
Duh!! Even blind-Freddy saw that one coming.
It’s like assuming that kids are going to learn all about relationships after reading Pride and Prejudice.
The keys to personal finance are not taught, they’re learnt. And they can only be learned from putting principles into practice and allowed the freedom of failure.
See, the problem is that while most students are taught the basics of personal finance at school such as saving, using loans for appreciating items, the risks of credit cards and hire purchase etc what they see is modelled from those that are close to them – namely their family.
If Mum and Dad are able to buy whatever they want, whenever they want, by using the credit card why is a young person going to save their dollars for the proverbial “rainy day”? In this article the quote is made;
“Personal finances are not being taught in the home,” said Patricia Hummel, a parent who also teaches financial literacy at Winters Mill High as a permanent substitute. “Studies have shown that only 26 percent of 13- to 21-year-olds reported that their parents actively taught them how to manage money.
The problem is a Catch-21. Parents don’t know how to use their finances well and therefore it’s like the blind leading the blind when it comes to teaching their children. They were never taught how to handle their money and so their bad habits are modelled before their children’s eyes who are ever-ready to replicate what they see.
So what is the solution? In my humble opinion I believe that families need to learn personal finance together. Obviously this isn’t the education system’s mandate but I believe there might be a business opportunity here for some entrepreneurial soul to solve this.
I’m not talking about financial counselling but from the other end of the equation prior to families becoming so entrenched in debt and bad habits. Personal finance mentors are needed to work short-term with a family helping them to budget, reduce debt, start their emergency funds, and begin to invest for their financial future.
It’s the only way we’re going to turn the tide of debt poverty in our nations.
Comments
There is another way to learn – the hard way.
Most of those kid’s grand parents learned about thrift and managing money in the depression.
These kids may get the same opportunity. At least their financial schooling may help them adapt quickly.
Very true Allan. They say we learn more by our failures than by our successes and we often learn quicker when put dropped in the deep-end.
A little financial suffering could toughen them up a little.
This is a great post. I have always known that financial education is taught at home whether parents are doing it on purpose or not. While the powerful influence of parents is not lost on me I still think schools should take part in educating kids about the basics of finance. Of course then one has to hope that at least one teacher knows how to teach finance basics. This topic is a huge one that warrants serious thought and planning.