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Why does the school system require classes like math, English and science but not basic personal finance? We force students to learn trigonometry, yet how many of us really use it after graduation? In contrast, how many transactions involving money will we each conduct on a daily basis for the rest of our lives?
Think about each time you purchase something with a credit card, make a car payment or reconcile your bank account. Even though these transactions are a daily occurrence for most consumers, more likely than not, we receive almost no financial education from our school system, or even our parents.
According to a 2007 survey commissioned by the National Council on Economic Education (now known as the Council for Economic Education), only 7 states currently require students receive some form of financial education in the school system. What about the other 43 states? We need to look no further than the daily news headlines about the Mortgage Meltdown, the Stock Market Crisis, the Housing Slump, or the Rising Cost of Oil to truly see how relevant financial literacy is, particularly for the next generation.
Just 20 years ago, personal finance was significantly less complex than it is today, and in many cases, parents supplemented what the schools did not teach. Fast forward to present day, and we now have hundreds of different home mortgage options and the burden of retirement planning has been shifted from the government and traditional company pension plans to consumers through investment vehicles like IRA"s and 401k"s. Because of their own financial woes, in many cases, parents are no longer comfortable with talking to their children about the touchy subject of money and personal finance.
Sadly, research shows that financial illiteracy has reached epidemic levels with no end in sight. Much has been done to bring awareness to other growing crisis like childhood obesity, the need to wear sunscreen, and drug and alcohol abuses, but why has something as important as financial literacy been largely ignored?
According to recent online consumer survey results from an online financal literacy quiz of adults:
o Only 40% know that their liability for credit card fraud is limited to $50.
o Only 50% know that Property Taxes and Mortgage Interest are tax deductible.
o Only 33% know what "Annual Percentage Rate" (APR) means.
o Only 56% know that the annual interest rate on most Payday Loans is 390%.
o Only 32% know what required deductions are taken from their paycheck.
o Only 59% know that the "Rule of 72" is the time required to double your money.
So, why should you care? The better job we do of financially educating the next generation, the more financially independent and self supporting they will be. There is much discussion right now about the government"s $700 billion bailout package, but instead consumers should focus on what they can directly control - saving as much as possible, avoiding or paying off debt, and living within their means.
Our school system has an obligation to prepare students for success in an ever changing world. Personal finance is a subject which will affect each and every consumer for the rest of their lives, regardless of age, education level or income. Financial literacy is a fundamental life skill that needs to be properly taught in the school system, alongside traditional Math, English and science. The public needs to put pressure on lawmakers to mandate this and parents and students need to be vocal locally. In the meantime, consumers need accept personal responsibility and invest in themselves to get financially educated. It can start by reading a book, attending a seminar or getting coaching from a trusted advisor. Nobody will ever look out for your financial well being as good as you!
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Source by Braun Mincher
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