Personal Finance Education in Schools

finance educationYesterday I was having a conversation with some of the guys I work with (or was it today, Night shift gets me all turned around.) and we started talking about personal finance education in schools.  When I attended High School we had block scheduling, with 4 courses a day for half the year, and another for courses for the other half of the year.  One of these classes was Govt/Econ, covering government for half the time, macro economics for a quarter of the time, and micro economics for 1/4 of the time.  In 13 years of primary education we received approx 1 month of micro economics instruction.  Although this is far from ideal, at least it is something.  Many school districts, and states do not require personal finance courses, and some don’t even offer them as an elective.  With how important this subject is it shocks me how little it is covered.  I am thankful for the one month I did receive because Mr. Verdonk’s econ class is where my passion for personal finance began. When we were covering compound interest I was amazed that I could become a millionaire without ever making a large salary through consistent long term investments.   Today I came across this article that goes in depth on the subject of personal finance education in schools and I thought it was an interesting read:

http://money.usnews.com/money/personal-finance/articles/2012/10/09/why-most-high-schoolers-dont-know-how-to-manage-their-money

I personally would like to see micro-economics taught at least 3 times in school, around 8th grade, 10th grade, and 12th grade. With each course going into more detail and covering more subjects.  In the 8th grade version things like making a budget, realistic income expectations and expense expectations, college costs including student loan calculations, vehicle costs, and an overview of retirement planning.  Students should also be taught that 85% of getting ahead financially isn’t the education, but the behaviors we choose.  You can know everything there is to know about investing, but if you never set aside the money, it doesn’t matter. By senior year students should have individual project assignments , including:

writing a realist budget, forming a plan for paying for further education, formulating a retirement savings plan, developing long term financial goals with specific steps for how to reach those goals, and detailed plans for how to go about major purchases like cars and houses.  Students should also know the dangers of “Sounds to good to be true” for scams and ripoff industries like Payday lenders, western sky, rent to own etc…

If these courses existed in all high schools I doubt there would be over $1 trillion in student loan debt, and the American people overall would be in much better fiscal standing.

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. Check out the Action Economics archives section for all past posts.

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