Written by Andrew Roth
My wife and I recently joined some friends for dinner after they purchased their first home. As the night rolled on, we discussed (and solved) the world’s most pressing issues. An area of universal agreement was the lack of financial topics in K-12 education. Looking back on our experiences, we realized that after spending years learning about cell structures, advanced math, and several courses on the history of ancient civilizations—only a few weeks were spent covering how to balance a checkbook.
Aside from the fact that the trajectory of our nation might be different if there was less money confusion, we agreed that today’s students are not well equipped to deal with the numerous financial decisions they’re forced to make as adults. This creates a pattern of ill-informed decisions that can have a negative impact on individuals and communities.
Putting things in perspective, Champlain College’s Center for Financial Literacy conducted a 2017 survey of all 50 states to understand how they graded in working personal finance concepts into their K-12 curriculum. Minnesota was given a “B.” For reference, Minnesota only started requiring a half-year economics course for high schoolers in 2013. Only a few months of broad economics curriculum was deemed an above-average grade, and more than half of all states fall short of this threshold.
Financial education should be a focus for students well before they reach junior or senior year with some topics incorporated as early as elementary school. While I appreciate a well-balanced curriculum, sacrificing one year of science and an elective somewhere along the way could provide space for two years of financial education. Among these topics could be the basics like “What is Money?,” how credit cards work, compound interest, and the more advanced stuff: saving for retirement, taxes, governance and fiscal policy, the basics of financial markets, and economics. Most students would be better prepared for adult life. Few people grow up to be physicists, but all of us try to balance income with expenses, buy a car, debate how to save for the future, and have the power to vote on financial initiatives that impact our communities.
While there are numerous organizations committed to the cause of financial empowerment, it is important that we do our best to instill some financial experience and knowledge in our own children independently.
For inspiration, maybe next summer you decide to buy a few copies of a children’s-oriented book on money topics and discuss it as a family? As children get older, perhaps you offer to reduce their allowance in exchange for matching funds deposited into a higher-yielding savings account? You could then watch this money grow over time, comparing its value to what was deposited and discussing how banks work. If you have a child earning income with a part-time job and there’s some extra money in your budget, maybe you offer to match contributions to a custodial Roth IRA with them—highlighting the value of investing and deferred gratification. If you are buying a car for a teenage driver, include them in the buying process. Walk your kids through how you budget for household expenses. While these are just some ideas, it will take a lifetime of familiarity to prepare our children for the decisions that will impact their future.
If we can put a spotlight on this long-overlooked aspect of education, it’s possible that the world we find will be a happier and more prosperous one!
If our team can help in this discussion by recommending resources, brainstorming ways to get involved, or sharing what we do as part of our industry, simply ask. Knowledge is power.