National Financial Literacy Needs to be Addressed

National Financial Literacy Needs to be Addressed
Nick Brothers - The Free Weekly Managing Editor

Nick Brothers – The Free Weekly Managing Editor

By far one of the biggest ongoing lessons I’ve had to learn by experience as I continue to keep aging away from youth is one thing: money management.

Luckily, I was born to parents that have a pretty good understanding of how to invest and use money wisely and can provide advice to me when I need it. I imagine most people would say they learned about personal finance from their parents or the always semi-reliable WikiHow article online.

According to a recent survey by H&R Block and its Dollars & Sense financial literacy program, a curriculum for teachers and teenagers, 75 percent of teenagers said their parents were their most important source of financial information. Also, 62 percent of survey respondents thought of their parents as good role models for money management, and only 4 percent saw their parents as poor examples of how to handle money.

At least to me, personal finance seems like one of those elusive things that you kinda just have to figure out on your own once you “grow up” and hit “adulthood” — the quotes used intentionally. I would presume, unless there is a genuine interest in the topic, that many young adults about my age have had to learn about managing their finances the hard way — jumping in the deep end and learning how to swim. This generation is about to be swimming in student debt, with the amount of students in debt tripling from 2004 to 2013, according to the Council for Economic Education.

The national financial literacy rate for youth, ages 15 to 18, is 59.6 percent, according to a study by the National Financial Education Council. I think we can do better than that. In fact, Alan Greenspan, the 13th Chairman of the Federal Reserve said it himself: “The number one problem in today’s generation and economy is the lack of financial literacy.”

So it got me thinking, should we require public schools to teach a financial literacy course? This isn’t a novel idea either, 84 percent of high school students desire more financial education, according to a survey by Sallie Mae. Among 16- to 18-year-olds, 86 percent said they would rather learn about money management in the classroom than make financial mistakes in the real world, according to a 2011 survey by Charles Schwab. Wouldn’t that be great to have public knowledge of how to maximize earnings, manage credit scores, establish solid savings accounts or how to invest in the stock market wisely?

Currently, 17 states have passed laws requiring financial education in public school systems. Arkansas passed a bill in 2013 to “promote economic literacy,” but it withdrew the requirement for public school students to pass a course in personal finance to graduate in the same year.

The problem about all of this is, if public schools are required to teach a course in financial literacy, will the teacher be qualified to give their students a balanced and useful financial education? For this plan to work, school boards would either need to provide training, contract professionals, or hire finance degree holding teachers.

This would need to be monitored closely and executed well, which unfortunately may end up being a tall order for some schools.

Perhaps the teacher acts as facilitator for the class and brings in members of the community to talk about their own experiences with finance? This way students could have the opportunity to learn from several different sources and build their own philosophy based on the information received.

While I know I didn’t achieve any masterful conclusions on this issue in this column, I do believe this topic should be considered its own academic discipline instead of a maybe three week lesson plan in high school finite math or home economics. That’s something we can change.

Thanks for reading.

Categories: Commentary