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According to Braun Mincher in the Christian Science Monitor, today’s financial crisis is a prime example of why the next generation needs “financial literacy.”
Think about how few of us ever use the trigonometry (or the Shakespeare) we learned in high school. Contrast that with the number of transactions involving money we are involved with every single day. And the ramifications those transactions have on how our lives play out.
How often do we use a credit card, make a car payment, reconcile a bank account, pay taxes, take money from the ATM? Did our schools — or even our parents — think to teach us how the financial world works?
Renting or buying? Applying for a loan? Making decisions about a 401(k) or IRA? Shopping for insurance? Investing for the future? Getting married?
Look at the daily headlines. Mortgage meltdown. Stock market crisis. The housing slump. The price of gas.
A 2007 survey commissioned by the National Council on Economic Education reports that only seven states currently require high school students to receive financial education in the school system.
Says Mincher, we need to educate our future generations to make smarter financial decisions.
Just 20 years ago, parents were often able to be generous with money and advice. And personal finance was infinitely less complicated than it is today.
Today these parents are enduring their own financial woes. (Indeed, when finances are a touchy subject, parents are reluctant to even bring it up.)
And now we have hundreds of different home mortgage options. The burden of retirement planning has shifted from company pension plans to consumers who must purchase investment vehicles. Many Investment choices are so complex that only professionals seem able to understand them — and from the recent headlines it would appear that even the people who dreamed some of them up don’t quite know how they work.
Mincher, the author of “The Secrets of Money: A Guide for Everyone on Practical Financial Literacy,” recently did an online onsumer survey [at FinancialLiteracyQuiz.com]. He found that:
- only 50% of quiz-takers know that property taxes and mortgage interest are tax deductible
- only 40% know their liability for credit-card fraud is limited to $50
- only 33% know what APR (“annual percentage rate”) means
- only 32% know what required deductions are taken from their paycheck
These are all basic pieces of information that are critical to financial decisions.
The better job we do of financially educating the next generation, the more financially independent they will be. They will be able to break free from ongoing parental support and avoid destructive financial habits. They will save money and maybe even create wealth.
The school system has the obligation to prepare students for success in a fast paced global economy, writes Mincher. This is a subject that affects all individuals for the rest of their lives — regardless of age, education level, or income.
Financial literacy is a fundamental life skill that needs to be taught alongside traditional math, science and language arts. The public should pressure lawmakers to see that it happens.
Parents: be vocal about this need in your communities. Students: demand this information — you have everything to gain and a lot to lose.
And the current generation needs to accept personal responsibility and invest in themselves to become financially educated.
Start by reading a book, attending a seminar, or getting coaching from someone you trust. But start now. Your future depends on it.
sole source: Braun Mincher’s September 23, 2008 article in the Christian Science Monitor online at www.csmonitor.com Teachers: check out some of the materials at HotChalk: http://www.hotchalk.com/mydesk/index.php/financial-literacy-for-students-list
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