By Brian Page, Finance, Economics, & Business Teacher at Reading High School, Ohio; Working Group, President’s Advisory Council on Financial Capability.
We are asking our students to make one of the biggest debt choices of their lives before they leave high school, student debt. Student debt now exceeds $1 trillion. It’s a growing problem that needs our attention. Many high school students have jobs and pay taxes and need to understand how to fill out basic tax forms and file for themselves. I could write a dedicated blog post full of further anecdotes, but you get the point. Many of the students we teach have adult responsibilities. Personal finance is relevant to all of their lives in the future, and to many of their lives right now.
Wealth inequality is growing out of control. As you can see from this daunting video illustration, it is worse than most Americans believe. How the inequality gap is addressed for the current adult population is passionately debated between our political parties. What is clear, as this research indicates, is a direct correlation between an inequality of financial education and economic inequality. Parents, educators and legislators should all agree that providing future consumers with a foundation of practical financial tools and concepts in our schools is a good step forward we can all take together.
Dr. Lusardi and Dr. Mitchell both indicated at a seminar I attended this fall that research indicates just a little bit of financial literacy translates into a 20% increase in someone’s net worth over time. Furthermore, the World Bank noted in this research that when someone is exposed to a financial education they are more likely to use financial services. Amy Rosen, Vice-Chair of the President’s Advisory Council on Financial Capability, wonderfully articulated in this short Bloomberg interview the economic impact financial education can make on our future economy.
#3 Common Core
Dan Kadlec best summarized the Common Core project I had the honor of working on in this article. “In the next couple months, the Treasury Department will go live with a website likely to be found at moneyasyoulearn.org. This site will offer teachers ready-made personal finance lessons that fit neatly into existing math and English courses.” Dan continues by adding, “The idea behind the money-as-you-learn project is that teachers who must now refashion their lessons to be in concert with the Common Core will have resources to seamlessly infuse personal finance instruction.” As working group chair Dr. Julie Heath [Director of the Economics Center for Education and Research] wonderfully stated, “It will be straightforward and practical information plainly presented in an age-appropriate manner.”
#4 Complicated financial system
Our financial system is becoming more and more complicated. It has evolved into a system that is reliant on consumers making consequential financial choices earlier in their lives. Examples include misinformed student debt choices that suffocate college graduates with unaffordable monthly payments for over a decade. Abusing credit now has consequences reaching further than a higher cost of debt such as higher insurance premiums and even limiting job opportunities. Our financial system is far too complicated and the consequences are far too great for consumers to continue to learn tough financial lessons from the school of hard knocks.
Each of us is passionate about teaching and about our students. I am biased, but I believe no single course is more meaningful to our students than personal finance. Dr. Victor Frankl said that “Being human always points, and is directed, to something or someone, other than oneself — be it a meaning to fulfill or another human being to encounter. The more one forgets himself — by giving himself to a cause to serve or another person to love — the more human he is.” His point, summarized brilliantly in this article is that we are happier not by pursuing happiness, but rather by pursing a life of giving. What better gift to give our students than the financial literacy skills they will need to manage the future economic challenges our generation continues to ignore.