Teach Personal Finance in K-12, as important as Sex Ed!

Personal finance is an essential life skill! Why oh why isn’t it taught in K-12 curriculum? Is it because that knowledge of personal finance could possibly lead us to independence from The Machine? *gasp*

Here’s a fun fact. Sex Ed became a public education issue after it was discovered that WWI solders didn’t know all that much about avoiding venereal disease, which was rampant in the ranks. A 1919 U.S. Department of Labor’s Children’s Bureau report suggested that soldiers would have been better off if they had received sex instruction in school. “The worries and doubts and brooding imposed on boys and girls of the adolescent period as a result of lack of simple knowledge is a cruelty on the part of any society that is able to furnish that instruction.” Nowadays, all states are somehow involved in sex education for public schoolchildren. 

Honestly, whose duty is it to talk to children about sex? When you get right down to it, Sex Ed is taught in schools because parents are very uncomfortable having “the talk” with their kids, and parents may even be uninformed or mistakenly pass along false information, or even leave out huge swaths of information. How did you think those G.I.’s got sexually transmitted diseases?

And, whose duty is it to talk to children about personal finance? Here again, many parents are downright uncomfortable talking to their children about this. They don’t want their kids to know how much or how little money they make, or to talk about their past mistakes with money. They may not even have all that much knowledge to pass along, and could use some good advice themselves.

I’ve never asked my parents any questions about money or sex growing up, and they never talked about it with me. These discussions were tacitly off topic. It has been agony for me to come up the learning curve, really terrible. I’d read books that said one thing, and then read another book that said something else. This is particularly true in those personal investing books. All personal finance books, every single one, should start with the household budget.

For the public good, all individuals must have financial fluency, and thus should be a part of the K-12 education! Citizens should have a foundation for making informed financial decisions for their entire lifetime. Unfortunately, most of us only get started making the right decisions after some pretty terrible mistakes, and by then it may be tragically too late in life to ever catch up properly.

During the financial crisis of 2008, I heard this phrase a lot, “They bought too much house.” But how would a person really know when they were beyond their financial capacity to purchase, or even if their mortgage rate was competitive?

Not all of us are going to own a home and need to understand a mortgage. But all of us should know about how mortgages work, and similarly how credit cards work, and how to judge if the interest rate is too high or too low. For that matter, we need to understand how interest compounds. We need to know about investment theory and asset allocation because many of us have 401Ks or IRAs and no idea what to do there. We need to know how to make a household budget, and understand what the budget consequences will be if we purchase a home. We need to understand the tax code in at least a rudimentary manner and understand how to file basic taxes, even if we may someday rely on an accountant to do so. We need to understand how insurance works. We need to know how to ensure financial dignity for our lifetime.

We don’t know how to do these things, and it leaves us feeling helpless, confused, afraid, and even angry. The country would be stronger if citizens knew personal finance.  This issue is so important to me, I just wrote my Representative about it.

Wouldn’t it be great if everyone knew how babies were made, plus how to make a budget and invest for the future, so those babies could have a more secure life? It would also be great if everyone had a living wage and steady work, but that’s another story.

The below is a link to how Sex Ed is taught in your state.


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Too poor to budget.

Did you know that there are iphone budgeting apps? This strikes me as a great oxymoron, and perhaps a sign that people do not realize how absurd it is to maintain a budget on that great instrument of privilege, the iphone.

I remember the first time I tried to put together a budget. My financial stress had been steadily growing, and I decided that the key was to control my spending. I’m a genius, right?

I was stressed because it was not unusual to be down to the single digits in my bank balance by the time payday rolled around. Those were not good times. I would look at that bank balance number, and I would think to myself about all the stuff I shouldn’t have done and should not have bought. When I was down to just a few bucks, I would hit the credit card hard to keep from going negative on the bank account, worrying and criticizing myself at the same time. I had been living with this cycle of financial stress and self criticism for a decade. Basically, for my entire adult life since I graduated from college and started living on my own.

I didn’t even know how to start a budget. My K-12 education and college education had left me without the practical life skill of budgeting. Now, I’m not blaming anyone but myself. But as I’ve grown into my adult years, I realize that two critical life skills were not available to me as classes in all my years of education: how to manage money and how to maintain health. Nowadays there is all kinds of information on budgeting. If you’re reading this on the internet, and you are, you can google search “how to make a budget” and there are many many wonderful answers out there. In terms of health, there is a lot of information which isn’t really helpful when you’re in trouble. Good luck.

But if I had learned practical budgeting skills in school, my post college years would have been a lot less stressful and I would have made different decisions.

I had resisted doing a budget for so long, because I believed in my mind that budgeting is what poor people do. Sure I grew up poor, but I just couldn’t see myself as a poor person. For crying out loud, I had a job! I was living on my own but responsibly with roommates, in order to keep costs down. I knew enough to know that I couldn’t afford to live alone, so I was already ahead of the game by having roommates, right? I now know that a budget is a basic necessity. I learned this not from school, but from the school of hard knocks.

Anyhow, I had to get rid of this problem of only having a few dollars left at the end of the month and I determined that a budget was the solution. I sat down and I really went at it. I started to do the math to see where things fell out. I put what I got out of my paychecks every month on the top, and then started subtracting. I subtracted out rent (the big expense), school loans (the other big one), all utilities, transportation expenses (easy to do because I had a monthly commuter card and no car), and what I had left over was just a couple hundred bucks to live with for the month.

I was shocked. Around $300 was all I for all food, clothes, toothpaste, shampoo, everything. This $300 was the reason my credit card bill kept on growing every month and was by now $4,000. I was spending way more than the $300 something I had. My heart started to beat really hard, and I just sat there staring at that awful sheet of paper.

And then I just put the budget away and resolutely traveled back to the land of denial. I would think about it tomorrow, like Scarlett O’Hara. Although I was working myself into a hole, I was fortunate. It was just me and I had no family to take care of. I could find a cheaper place, try to work something out with the school loan folks and pay less each month (which would make it worse for me in the end, but that’s a different story), I could get a second job on weekends. I was one of the lucky ones. But the shock of seeing those numbers was a big one, and in that moment I just didn’t have the energy to radically change my life. So I kept on, same as usual, but maybe with less latte. It wasn’t until a decade later, when I was in bigger trouble but with a bigger paycheck, did I finally get myself out of debt.

Just today in the news, the Associated Press reported that 4 out of 5 adults struggle with joblessness, near poverty, or reliance on welfare for some time in their lives. 46.2 million Americans are actually living in poverty, which is defined as $23,000 for a family of four. Budgeting is an unrealizable dream for the impoverished. They are just barely hanging on. I hope that no one ever says that the poor are irresponsible with money and need to budget better.

What were your reactions the first time you made a budget? Or how about, what are the reasons you are not making a budget?

Below is a link to the AP report, it will open up in the same page.


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Early Money Memories

I always had enough to eat. Thankfully, that was never a problem in our family. I remember my mom was able to buy groceries, and also come back with a treat like a bag of Hershey’s mini bars or Cheetos. We never went out to eat unless it was fast food. Boy, I really loved going to McDonald’s, Kentucky Fried Chicken, or A&W Root Beer. I think food at those places was better back then. I didn’t go to a real sit down restaurant until my junior year of high school, when my big sister took me out because she told my parents I needed the life experience. I remember being at that restaurant at the Burlington Mall in Massachusetts and having no idea how to behave.

When I was little, I didn’t know the difference between rich and poor. But even around 3 or 4 years old, I knew our car was a problem for us. I remember in those early years, watching my dad change the oil in the car. He seemed to check and change the oil a lot. I would be scared seeing him in his wifebeater t-shirt and shorts in the driveway. The muscles in his arms and his hairy armpits frightened me. He always seemed to be in a bad mood when he was working with the car.

We had two front hoods to our car, and neither of them matched the body of our huge old Ford. Depending on the weather, my dad would have to switch out the hood of the car or else the hood wouldn’t latch shut. In hot weather, one hood would fit the car and in cold weather, the other hood fit. I may have only been 3 or 4 years old, but I still noticed that ours was the only car in the church parking lot that was rusty and the hood didn’t match. Back then, I didn’t know what money was or that it took money to buy stuff. But seeing our car and the other cars at church was the beginning of me feeling ashamed.

My dad wasn’t perfect. He did what he could, and he got his family to church. My dad is a hero.

Here is some sheep in Virginia, where we lived when we had that old Ford.

Sheep Grazing -- Williamsburg (VA) September 2012

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“Freedom is …

“Freedom is what you do with what’s been done to you.” Jean-Paul Sartre

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