Remember being baffled by your first credit card? What is this, how does it work? Remember being intimidated the first time you opened a bank account?
In February, 2013, the U.K. announced that personal finance instruction will be mandatory in throughout the school system beginning in 2014! Australia developed its national financial literacy strategy in 2011 (www.finanicalliteracy.gov.au) and has rolled out its program to their public schools. WOW!
These countries got their acts together, and developed these programs for the good of their citizens in the aftermath of the global financial crisis of 2008. Singapore has been way ahead of the game, they created MoneySense, their national financial education program, way back in 2003.
A quick look at http://www.moneysense.gov.sg reveals that the Singapore program covers the three essential tiers of financial literacy, and it is pretty freaking great:
Tier I: Basic Money Management. Budgeting and saving, with tips on responsible use of credit.
Tier II. Financial Planning. Skills and knowledge to plan for long term financial needs.
Tier III. Investment Know-How. Knowledge about different investment products and skills for investing.
Tier III is the big one, the most challenging to teach. But, you know, high school students are are old enough to have babies and create the miracle of life. I would argue that they should also have the ability to do asset allocation in investment portfolios and know the miracle of compound interest.
As of July, 2013, Virginia, Utah, Tennessee and Missouri are the only states that require a one semester standalone course in personal finance as a graduation requirement. I don’t know what the curriculum requirements are, but I would be very happy if the programs went from how to open a bank account and budgeting basics, all the way through insurance, mortgages, credit, taxes, up to how to manage an investment account and asset allocation.
Wouldn’t it be truly amazing if we knew all this stuff before we got out of high school? We would feel confidence we had the knowledge to manage our financial lives for our lifetime. (Getting the money is another matter.)
America’s Gen X’s have shown that they have not been able to live better than their parent’s generation, the Baby Boomers. Our educations cost far more than our parents’ educations, and our housing and healthcare costs are also must higher. If you can, talk to your parents or a relative about how much things cost back in their day compared to their salary. Gen Xers also don’t have pensions, they are the first of the 401K generation. But did our country prepare Gen Xers with the knowledge of how to manage their 401Ks? Noooo. Things are looking even more grim for Gen Y’s who are struggling to find jobs. God help the Millennials coming next. America’s citizens just seem to be getting weaker and weaker.
Did you know the US formed the Financial Literacy and Education Commission in 2003, the same year Singapore did their MoneySense? They are known as FLEC and they have done FLEC-all for the American people. FLEC is the organization behind http://www.mymoney.gov. Ever heard of it? I haven’t either. This is one of the worst looking websites I have ever seen, which means it is a government website. Those financially literate Australian high school students could have built a better website.
A month ago, on June 25, 2013, President Obama signed an Executive Order establishing the President’s Advisory Council on Financial Capability for Young Americans. This is good. The Secretary of Education is on the council and there are plans to pilot financial capability programs in schools. I’m concerned because Executive Order is set to terminate in two years unless extended. Let’s try not to mess this one up, OK?
http://www.moneyasyoulearn.org was “recommended as an initiative” from the Council on Financial Capability. The website is a resource for teachers, giving guidelines on how to incorporate financial concepts in the common core curriculum. The website looks good, but as you click through, there are a lot of blank links. And honestly, it places the burden of incorporation on the individual teacher. No materials are provided except the advice on the website. Is this the best our country can do for teachers and young citizens?
http://www.moneyasyougrow.org is a companion website, also recommended by the council, and provides good discussions for parents to have with their kids as they reach various ages. I like this website a lot. I believe parents do need tips and guidance on how to talk to their kids about money. However, this website does not in any way prepare a kid for the financial literacy necessary for a lifetime. It really is just the bare bones basics.
The FDIC, the government organization that insures our bank accounts up to $250,000, has an educational program called MoneySmart, same name as Singapore’s program. Our MoneySmart is aimed at the 12-20 set. It’s free, available for order on the web (http://www.fdic.gov/consumers/consumer/moneysmart/young.html), and I just ordered a copy to check it out.
Financial literacy as required curriculum in K-12 is the best answer. Wouldn’t it be great if we had financial skills for a lifetime by the time we graduated from high school?
- Financial education: Does your state make the grade? (thefinancestoday.wordpress.com)