Monday, 05 October 2009
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What Should Teens Be Taught About Personal Finance?
The main focus of the required public education is to educate and prepare a young person for adulthood. The various topics that are covered in high school provide a basic knowledge that many adults require, but to be frank, it also contributes a large amount of information that most adults rarely use and are mostly applicable to trivia shows. I was surprised in high school when I discovered that basic financial education was not provided, and was delegated to parents to provide. There are several topics that I think every high school student should be taught.
Budgeting- how to create a budget, suggestions on how to stick to a budget, including savings and retirement goals, how to cut back on expenses.
Proper recording of bank accounts- balancing a checkbook, reconciling bank accounts, maintaining proper records, and an understanding of basic banking terminology
Credit card management and understanding of terms- reasonable number of cards and credit limits and reasonable interest rates, How to manage credit card debt, how to decrease it, Overdraft fees
Insurance- auto/home/medical/life, should be taught the basics in high school. From understanding deductibles and premiums and the relationship between them to how to analyze the level of coverage an insurance policy offers.
Property ownership/ rental laws- general rules in regards to rights and responsibilities
Basic taxes- understanding your paystub tax calculations, basic format of income tax form, if you should withhold more/less, Dependants, and exemptions. How long you should maintain records for.
Labor laws/rights- basic protections and rights, understanding of employer and employee rights
Credit -how it is earned, how it changes, how to manage it, how it is calculated
Retirement accounts- 401(k), Traditional IRA, Roth IRA, etc. The advantages and disadvantages of both
All of these topics affect an adult on a day to day basis. Each of these I feel should be required for public education to truly prepare someone for adult life. To teach this shouldn’t be too difficult, there are plenty of teachers with finance degrees, and any area where they are lacking could have a specialist teach that area (ex: CPA, banker, insurance agent, real estate agent).
Anything you would add to the list? Did you have financial education included in your high school education?
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Comments (40)
i totally agree. i was in high school and i learned none of this, and the finance class offered was a total joke. when i turned 18 i had some assets given to me by some of my relatives and i was SO confused about what to do because it was so confusing. instead of learning life skills like these i was learning about hamlet... greeeatt
I agree, and some of that is taught in high school but in an elective way - not all students have to take it, and it's a "lower" math class that covers the most practical functions we'll be using in day to day life. Where I am, it's called "math for everyday life" and is for the students who don't need or don't want to take data management, calculus, and advanced functions which are specifically marketed to those who are headed into either university or college.
The same applies to laws and labor laws, while there is a mandatory grade 9 class called civics, it's only a half term long and is very, very basic. Law in grade 10 is also an elective, and I only took that because the teacher was awesome.
I also feel that aside from school, that information should be supplemented by parents (or vice versa - one will plant the seed, and the other will nurture it until it grows into full bloom).
Honestly, I had to take about 5 different economics classes in my undergrad to learn all of these LOL
I agree that kids should learn it before it becomes a second language to them in college
or even worse, when they're out of college with tons of debt from going to college.
I would add debt to the list; the psychological effects of the fear of not being able to pay debts in case a job is lost or other income. I think paying with cash is the best way to go if it's at all possible. Yes, I had consumer ed in highschool.
I think it should be taught that having a credit card is possibly the worst thing that you can have at a young age. Truthfully, your credit score isn't as important as the commercials make it sound. Students should be taught how to pay for things with cash and if you can't afford something, not to buy it. If we could all afford to pay for things with the money that we make, we wouldn't need credit.
I completely agree. I'm a third year now in college and still don't understand how a bunch of these things work. :(
They should be taught how to balance a check book, pay off a credit card every month, pay bills, and earn money. Most people don't teach these life skills. Very sad.
Pat J
Church
Yeah they should teach us these things. I'm in college now, kinda young still... my parents baby me so I have never been put to the test to learn these things. I'm still very confused and I wish there was one semester long class to cover it all in one shebang.
I actually... wanna be responsible. I just need some help and a little push AH!
@iiinfinitesimal@xanga - I hope it all worked out for you.
@pinkdagger@xanga - We had that class at my school too, and it was advertised to the same people you describe, but sadly they didn't teach anything more than basic math (pre-algebra). I agree on the parents.
@tastytimmm@xanga - something similar for me too, then I thought about how non-business majors probably never learn about this from people other than salesmen
@designandart@xanga - I can't believe I missed debt
@MichaelCavaness@xanga - I do think we depend on debt too often, but credit scores are important, especially when buying a house. Credit cards are only bad when people don't know how to manage them. The point is to educate and teach responsibility.
@tieduh@xanga - I would suggest learning them sooner rather than later, it will pay off later.
.
@LoveYouToDeath16@xanga - depending upon what you want to learn, there are some great resouces out there to get a basic background, some is better than none. (is that enough of a push)
Debt would be a huge thing- most people who jump into house mortgages and car loans have no idea what they lose in interest, and what they would save if they would wait to buy until they have at least 25 percent, (ideally, 50 percent) as a downpayment. Teens should be able to calculate such things, and make informed decisions about debt.
Keep em in the dark
-P
I 100% agree to, students should be taught the basics in elementary school while going more in-depth during high school - perhaps relating to how personal finance can benefit in the future and how to manage it for work, loans, etc. I was never taught any of these things and always have to google them up because I don't understand the concept very well
I had all of this stuff in consumer math....
I'm glad I did though.
Everything.
Good idea. If they don't have it in school, mom or dad should talk about it with them.
What teens need to learn about finance comes years ahead of this: honesty and integrity. The preparation of these lessons comes years before that: parents practicing these. We can teach until we are blue in the face, but still end up with dishonest, blame-shifting little shysters without the diligent teaching and practise of integrity.
@xsimplepleasuresx@xanga - credit scores do help when you are buying a house, but the most important thing to a bank is how much money you make and they look at your credit report more than your score. The credit report shows how much credit you have available vs how much of your credit you have used up. The credit score alone can be misleading. The best way to go through life is to never use a credit card and if the situation requires it (like a hotel, etc) pay it off immediately. Even if you are young and don't have a good credit rating yet, but you make enough money to pay for the house you are wanting to purchase, a bank will loan you the money. You may have to pay a higher interest rate for the first year or two until you establish a good payment history, but any good bank would eventually lower your rate to keep you as a customer.
I personally wish the government would put a limit on the total amount of unsecured debt that a person is allowed to have. It wouldn't hurt anyone and it would help millions of Americans and possibly help us avoid the next economic disaster that was a result of too much unsecured debt.
At an early age as possible. Teaching is important in all things, money management is important part of this.
I completely agree I just graduated high school and I feel sooo lost! My parents never taught me these things, allowence was for going to the mall and going shopping not for saving twards something I really wanted. And instead of trying to prepare myself for life my senior year of high school I was too busy being frustrated with SOHCAHTOA cause Im gonna you cosigne for what exactly?!?! And now I somehow have to teach myself all these things while trying to accomplish them at the same time.......thanks alot highschool?
i was actually PISSED when i entered high school only to find out that most of the classes i was taking actually had no relevance to what happened after high school. If it wasn't for my mom teaching me everything at home i would be like everyone else in my class. i have two friends that are only 18 and are already over 20 thousand dollars into debt because no one taught them how to manage their shit. and one that's going IN to debt, because no one taught her how to manage her school tuition payments or that there were options other than going and jumping into a high interest school tuition loan.
that's another thing that needs to be added to the list. payment options, for EVERYTHING.
i completely agree. luckily my parents are helping me prepare for my future, because if they weren't, i'd be screwed. at my school we have one elective you can take, which is an ap class, that will teach you a small amount of this stuff. besides that, nothing we learn will get us anywhere really.
Man, if I knew . . . I would've at LEAST saved half of my spendings just to buy college books and pay for lab fees.
:(
my school actually did teach these. except for maybe retirement. i was in the business and finance academy, so we got three years of this stuff including accounting college credit classes. i completely agree with you on the requirements for hs students. it drives me crazy that some college students dont know some of the basics of things like credit and loans.
@MichaelCavaness@xanga - The level of income is important to the banks, but what is more important is how you manage your income. A bank will give a loan to someone who makes less and manages their funds better over someone who makes more and is always in default on their payments. Of course a bank will not give a loan to someone who doesn't earn enough money to afford the payments. (I believe the current acceptable rate of payments to total income is somewhere between 30-40%, not entirely sure about that one.) Banks use both the credit report and score when determining eligibility, both serve a purpose and both can contain errors. I am not advocating using credit cards for everyday purchases, but going cash only can cause problems because the only thing worse than bad credit history is no credit history, it comes down to ability to predict how a consumer would manage funds. I always suggest using credit cards only if you have the funds to make the payments. I do think having a limit on the amount of unsecured debt a person can have is a good idea, but I would be very particular about what government agency gets to control it, I specifically want it out of the hands of congress. I don't want politicians using consumer debt in their campaign promises and weekly debates. I wouldn't be opposed to an agency like the FDIC or Federal Reserve or a new agency to oversee it. Debt was one of several causes of the current recession.
@craigellachie@xanga - good point, but that would probably be better as its own post entirely.
@Delia712@xanga - my hs didn't have much of a business department, there were 2 teachers that taught all of the business classes. I took most of my accounting classes as independant studies in hs, 2 of which were AP.