Most parents agree with the idea that financial education should be taught in schools…in addition to being taught at home.
There are, however, several challenges with financial education in schools:
- Schools are gears toward getting students to be proficient in subjects they are tested in: math, reading, writing, science, etc., NOT subjects that are classified as electives.
- The main reason schools are gears toward tests and these subjects is that they aren’t so much looking at what helps create a successful human being but are focused on getting a certain percentage of their students into college because most schools, like most adults, are brainwashed into believing that college is THE way to success rather than simply A way.
- Schools also focus on the tested subjects because most of the time, schools funding is tied to how well their students do on those tests.
- When a school or individual teacher makes a commitment to start teaching their students about money, the programs that are ‘affordable’ are only not the best financial education program available and you do get what you pay for.
- Free financial education programs, most made available by financial institutions, are boring…they use boring workbooks, boring curriculums, aren’t taught in a relevant way (i.e., students have no connection with the material) and well, all in all, this makes the programs pretty ineffective. Here’s an interesting article from Kiplinger that reflects the point.
Let’s say that schools start really making a place for financial education in their classrooms…for whatever reason: legislation, demand by parents, demand by students, new goals by the administration…it’s going to take it all.
- Budgeting: The lesson is generally that you must spend less than you make and live within your means rather than simply planning your spending. There is a subtle message of ‘not enough’ when teaching budgeting. In Camp Millionaire and The Money Game we teach kids that ‘a budget is a tool to make their dreams come true’ rather than the idea that they always must be on a diet with their money.
- Saving: The lessons usually revolve the idea that we have short term and long term goals though the long term goals are often college and buying a car. We teach kids that they have two Savings Jars; one for saving up to buy something (for cash…not borrowing to buy it) and one for what we call “just in cases.” Savings in Camp Millionaire isn’t tied to different types of goals but what you use the money for instead.
- Credit Score: The lesson is that they WILL borrow money so they better make sure they have a great score when they go to buy it rather than teaching them that borrowing money isn’t mandatory in life. But you’d hardly know that with the way everything is offered credit from about every type of company imaginable these days. Let’s teach kids that they don’t have to ever borrow to buy something if they don’t want to (and then teach them how…I’ll get to that in a second).
- Debt: The lesson is often to learn to use credit cards wisely rather than not using them at all. Some of the richest people in the world use debit cards because they don’t want to ever use other people’s money the wrong way. Then again, others use their credit cards to accumulate points to use for mileage, trips, bonus products and more. A better lesson is learning the difference between Good Debt (debt other people pay down…using from investing in assets) and Bad Debt (debt YOU pay down…usually from buying piddlyjunk, aka liabilities).
- Miscellaneous lessons including insurance, buying cars, saving for college, borrowing money for college (yikes), retirement accounts like IRAs, and a few other things.
Why do you want your kids to learn about money in the first place?
So they’ll end up with plenty/lots of money when they’re older?
So they’ll be able to retire when they’re older?
So they’ll be able to provide for themselves and their families?
So they’ll never move home because they’re in debt up to their eyebrows?
All of the above?
Financial Literacy Education Must Teach Students How To Invest
It’s a rare financial literacy curriculum that teaches investing as one of the core principles…but without it, it’s like teaching kids how to brush their teeth but never showing them how to use the dental floss…or worse.
Investing is putting money (or time or resources) into something with the expectation of some type of gain from that.
Why is the idea of investing so critical? Because it’s darn near impossible for people to ‘save’ their way to retirement…that is IF you want to wait until you’re pretty old to retire.
The idea behind investing is learning to send your money to work in addition to, and then instead of, you!
Investing means you put money into real estate so you can live on the rental income, put money into the stock market so you can live dividends and interest and put money into business ventures (yours and other people’s) so you have profit cash flow from continued profits to live on.
Learning to invest wisely takes time. The challenge is that everyone on the planet has learned different things about investing…including developing different beliefs about different types of investing.
For example:
- Some adults grew up with parents who invested in real estate and did well so that’s their focus.
- Other adults grew up with parents who lost a ton of money in real estate and wouldn’t invest in it if it were the only way to make their money grow.
- Some adults grew up with parents who taught them about the stock market and made great investments.
- Others grew up with parents and/or grandparents who constantly said, “the stock market is too risky.”
- Some adults grew up with parents who were entrepreneurs, experienced the freedom of being able to call their own shots and create their own lifestyles and wouldn’t dream of getting a job.
- Others grew up with parents who always had jobs and talked perpetually about the securing of going to college and getting a good secure job. We all know where that has gotten our population.
What’s the point?
The point is that the world we live in has changed. Kids need to learn the difference between Earning money and Making money.
Getting a job isn’t easy and isn’t necessarily the most safe and secure thing to do.
Saving alone is almost never going to create financial freedom for anyone.
Financial Literacy Solution
If your kids are in a financial education course at school, make sure the curriculum includes investing. If it doesn’t, volunteer to teach the missing piece yourself. Don’t know how to teach it? Call me…I’ll show you how easy it is to teach kids the importance of investing for their financial futures.
Want to make sure your kids learn about money and investing in a fun and highly effective way?
Invest in their financial future…and the financial future of every one of their classmates…by giving their teacher The Money Game.
Even if you can’t afford to do this, let the teacher know they can apply for a Get One, Give One™ Grant to receive The Money Game for free.
Now that’s investing in everyone’s future!
Really nice article Elisabeth. It covers some interesting points especially the shared responsibility of schools and parents to teach financial literacy.
Thanks Dan! It really is a community project:-)