Stocks are great to know about, yes, but even BETTER would be basic financial management. Who gets right out of high school and starts investing before landing their first job/credit card/own apartment? I know people do it, I just don’t see the logic (although I’d admit it does seem more fun).
Check out this comment by girlwithredballoon on an older post of mine:
“You know, I took Personal Finance in high school, but they didn’t teach anything about credit cards, compounding interest, different types of student loans – none of that! They taught us how to write checks, and then we had to play a stock market game where we chose companies to invest in. I know investing is important but knowing the dangers of credit cards ahead of time may have helped me to avoid them in college!”
Exactly! I learned how to write checks and balance a checkbook in Senior year too, but that was about it. There was no mention of 401k, IRAs (were they around in the 90’s?), credit cards, or just plain saving. But of course we had to play those stock investing games! God forbid we leave school without doubling up our FAKE money.
Maybe I’m naive, but I just don’t see how investing in individual stocks should come before the main pillars of personal finance. Think about it. Say a student triples his/her money in the “fake” market and then thinks he/she can make it big in real life and tries to out game it all? The odds are against them, especially if they think they can do it again in the 3-4 months allotted like in class. They then lose a chunk of their money and end up walking away thinking investing isn’t for them.
Only INVESTING isn’t about just individual stocks! It can be a main ingredient, but there’s plenty of other places you can put your money – CDs, bonds, mutual funds, target-date funds, treasury bills, etc etc. Stocks can do wonders for your portfolio (I love ’em to death!) but you should have a grasp on the rest of the areas before jumping in and playing.
You teach a kid how to save 10% of all their income, or pay their debt off on-time, and it’s a whole new ball game! Not as fun to teach I’m sure, but it’ll stick with them MUCH longer than some crazy stock game. Am I right? Am I missing something here?
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I had a class in high school where they wanted to teach us about the stock market. As a result they put us in teams and gave us a fake $100k to invest in the market… then they told us to compete over the course of the 12 weeks of class… Whoever won was given a prize.
At the time I was still smart enough to see right through this and was absolutely pissed because they were basically teaching speculation, not investing over the long haul. Dumbest thing ever. The problem with teaching financial literacy in America's schools seems to be finding financially literate teachers and administrators who can actually monitor and run the programs! As I'm sure you're aware, financial literacy in America isn't exactly a common trait.
I've never had a personal finance class, so this is all news to me. However, I do think it would be a fantastic initiative to have at our schools. Especially since we are mired in debt as a country, we need to start teaching the new generation about financial responsibility. Who's with me???
As a teacher, I am trying really hard not to see the blame for the financial crisis. But posts like these are slowly but surely placing ALL the blame on teachers/schools. Not the BANKS, CREDIT CARD COMPANIES, etc…
Should PARENTS teach better… YES… Should companies act more RESPONSIBLY when handing our credit… YES…
Please, please, please tread these waters carefully. Schools CANNOT teach EVERYTHING about EVERYTHING, and it isn't just getting the people who know what they are talking about. It is just easy to say "I never learned that in school" and then it becomes about the school's failure.
The problem is still the I NEED attitude, the idea that cable and cell phones are a NEED not a want. Until those attitudes are changed, things will not change. And schools cannot teach attitudes. Advertisers and banks and all those people making money off are debt don't want to change these attitudes.
My parents didn't teach me anything about personal finance. My teachers didn't teach me anything about personal finance. Guess that leaves only one person to blame for doing it all wrong. Darn! I hate it when that happens :)! I did enjoy the stock market game in school, though. It peaked my interest in learning more about finance, so maybe it helped a little in the long run.
Anonymous –
I think a lot of people are more apt to blame the school bureaucrats that steer curriculum rather than any individual teachers for the lack of financial education in schools.
Still, the fact that money management, investing & entrepreneurship are subjects that are passed over so often in schools when they are such overwhelming parts of today's society is almost criminal in its negligence. Those banks and credit card companies are filling this gap and providing their own "education" to consumers, which does nothing but line their pockets.
-B
In IL I believe a semester of financial education is required, but my school did this in the form of an Economics class so the main focus was still not on the main points that you mention. Unfortunately consumer math courses were only for those who were not taking college track geometry, algebra, calculus . . . .
But really the decision does have to start with lawmakers and people who are in charge of driving curriculum. Unfortunately in a world of high stakes testing unless something is a clearly stated state goal and is put on the state test, it is not going to be covered as heavily. There aren't any questions about MuFu's on the PSAE in IL.
J. I don't think you are missing anything. Amazingly personal finance is taught in many states today but the quality of that education and the focus needs serious attention.
Anonymous – Parents have an obligation and have been failing to meet it, no doubt. But school systems are also culpable. School cannot teach everything and should not be expected to but personal finance and money management is a basic skill that is required to survive and contribute to the good of our society. It absolutely should be a part of every public education!
Every year since my kids started school I have seen the purchase of smart boards and technology and text books have been replaced by workbooks with tear-out pages that have to replaced every year. Schools can't do everything but they could do a lot better!
In your defense, the failure of the public education system is the fault of the parents, not the teachers. As parents we need to take a more active role in our schools and our communities.
@Ryan @ Planting Dollars – YES! I love me some speculation every now and then, but to give kids the notion that it's all about picking hot stock picking is crazy. I know the schools mean well, but it's hard to understand why stocks are picked to be taught over other main pillars. Btw, did you win? ;)
@Investing Newbie – I'm with you! haha… although I bet there are some who will read this and say teaching personal finance in schools won't help a bit. But I still think it's better than nothing.
@Anonymous – Hmmm…well 'm not a teacher (and I'm certainly not placing "ALL the blame" on them), but I can def. see how you could get frustrated with this. For what it's worth, I'm not singling out teachers themselves here, I'm singling out the master game plan of school systems which I'm sure devises these things. In particularly, the schools that I have attended, and others it seems as well who plays this whole Stock Game.
You mention "Schools CANNOT teach EVERYTHING about EVERYTHING" and I agree, however in this post you'll notice I said they mainly taught about stocks w/ a little checkbook balancing on the side. That is surely not even close to everything. I don't think it's wrong to want more basic personal finance taught in general.
As you mention there are a handful of variables that made this Economy go into crazy mode, and I'm fully aware of that. If you're a regular reader of this blog you'll know I tend to blame the people themselves who go into their own messes – the advertising and big banks and all helped – but ultimately it's each of our individual actions that led us to where we are. Not school teachers. All I'm saying is I think it would be more beneficial to swap out stock games with credit card games or "who can save the most" games, etc.
@Brian – Hey well that's good! I can def. see how easy playing this game makes it to get the class involved, no doubt, just wish there were more financial meat around it ;)
@Blair MacGregor – You said it much better than I did in my response :) It will be interesting to see if anything changes going forward, esp as we get into better times. Would be sad if everyone went back to normal.
@Christine – Interesting. I've been out for so long that I forgot about all these new(ish) tests and exams that are a bigger part of schooling these days. That's a whole new topic for another day though ;) And one I'm not qualified to start! haha…
@LeanLifeCoach – Awesome! I'm glad to hear personal finance is taught more than we know :) Much better than thinking my education on finances is all people still get! Wonder if I could sit in one of these classes and see how it's changed over the years? Also wonder why only some states have them, but not all?
In our high school we had to take an Economics class senior year. It mostly covered large scale economics and government fiscal policies but we did learn about debt(credit cards, student loans and mortgages)and the stock market. It didn't cover everything but it got me interested enough to learn about personal finance through blogs. We never played a stock market game.
"Maybe I'm naive, but I just don't see how investing in individual stocks should come before the main pillars of personal finance."
I generally agree with the rest of the commenters it isn't you…it is the system. You can't call a course basics of personal finance and push stock speculation. The teacher who got offended seemed more frustrated with the system and I bet if she or he responds they'll talk about their experiences with dealing with bureaucrats
J You have a great point! I never took a class about the stock market but I know of people that did. Especially right now it would be great if they taught in school the basics of finances and what accumulate debt can lead to. Also, it would be great if parents started teaching these basics too :) Mine personally didn't and I kind of wish they did.
I absolutely agree with you. I think high schools should also place a WAY bigger emphasis on teaching about basic lending, especially student loans. Most 18-year-olds sign their lives away on student loans without even knowing the basics. They're setting themselves up for a lifetime of debt before they even understand how it works. Since so many new grads take on student loans as their first debt, they should definitely be learning about this in high school.
Hi J
As a former elementary school teacher myself, posts/news articles like these really get under my skin. Especially since my dad is currently a high school Econ teacher and does teach about paying yourself first, retirement, loans and interest rates. It is happening in classrooms, I can vouch for at least 1:)
My personal opinion is that these habits need to start at home and be discussed at home for years before kids sit down in their senior economics class (at age 18) and play the stock market game. I've got twin 2 years olds who both have savings accounts (as of today, they have saved 100% of their 'income', ie. gifts) and both own a handful of individual stocks. What does that mean to them? Nothing, but you can bet that we will continue to teach them about the joy of personal finance for the next 16 years before they jaunt off to college…with their 529 money in hand.
My professional opinion is that, yes, there are a lot of improvements that can, and hopefully will, be made in the public school system. However, what is taught in school needs to be reinforced, and often introduced, at home. Home Ec, English and Econ teachers trying to instill the joy of cooking, a love of reading, and a concrete grasp of money are hard up when parents watch tv and never set the example of reading, order take out and don't cook, and who are in debt themselves and don't save for a rainy day. Your children are watching you. As a teacher, who sees your child 1 to 6 hours per day 181 days a year, your example plays just as important of a role in their development as ours and we are all responsible. I don't think fingers can be pointed either way.
I'll get off my soap box now and go read to my kids;)
Trina
You are completely right. However, I didn't even take a PF class in high school. I was one of the many that didn't know how to balance a checkbook when I graduated high school (99'). I agree with Trina. I wasn't taught at home though. I had to learn the hard way. Fortunately, I joined the debt free train in 07'. I just wish it would have been before I went 35k in debt. Live and learn though. My kids will be taught by my example. Great post and discussions.
We had to take either economics or finance. I think I took economics. Sad that I'm not sure. I remember vaguely something about supply and demand so it must have been econ. (I was even a good student! I just didn't care about econ.)
I do think PF should be mandatory — teaching about credit cards and compounding interest and all that. It would only need to be a semester.
Most importantly, if you DO play the stock game, I think you should also have to read about the stock crashes that happened. Stock games are perfectly great: You get to enjoy all the success or even fail without any real consequences.
I do read your blog, that is why I said to 'tread carefully' with this subject. Yes, districts and states determine the curriculum, but it is always the teachers who bare the brunt of blame. As Trina said, parental examples go a lot further than what is learned in the classroom, and that starts early. The 6 year old who does not have books at home will not love reading, no matter how well the teacher can teach the child to read. Schools can expose, but they can't solve the problems of the world.
Add personal finance classes, no problem. But suggest it in the way to enrich or enhance, lets move forward, just don't blame teachers. That is all I ask.
My high school didn't offer a personal finance class. My mom taught me everything from how to use a debit card, balance my checkbook, what an overdraft fee is, use a credit card, pay off my credit card, read the credit card application terms. EVERYTHING! My mom was amazing.
Now that I'm in banking and have been for 6 years, I see the impact that it has on our youth when they aren't taught these things. I agree with the teacher that it isn't just the school system's fault. Parents should take some responsibility to teach their children the meaning of personal finance. And the individual should take responsibility as well as they grow up.
What is more frustrating to me is when people don't own up to the mistakes. I hate when a teenager overdraws their checking account and they blame "the bank" for that mistake. The PARENT needs to help educate their child and the teenager needs to take personal responsibility. I agree the overdraft fees are too high. But I don't have control over that. What I do have control over is making sure I use my check register and now exactly what comes in and goes out of my account. So if I'm stupid enough to overdraft my checking account, I deserve the overdraft fee.
– Heather
I agree wholeheartedly with this post. I graduated high school three years ago. I didn't get a grasp of my finances until I took an economics course, and a personal finance course in college from two very qualified professors. My personal finance professor is a multi-millionaire, and he taught the basics of investing AFTER he went over the basics of personal finance (savings, retirement, IRAs, etc). I'm grateful, because even though I have student loans to deal with, I don't have any other kind of debt.
I did a whole radio documentary on this topic in college and it continues to blow my mind that high schools and colleges continue to ignore the fact that American students have no idea how to handle their money.
I can count 5-10 ridiculous waste of time classes I took and you can't tell me 1 of this could've been substituted for a "Money 101" course?
It's crazy and it needs to change soon. Luckily, some states are (slowly) fazing these courses into high school curriculums.
Wow, I feel like I could write a whole book of rant about this topic!
Austin @ Foreigner's Finances
I totally agree Parents play a major role with this stuff. I'm very very blessed that I was taught about money at home, and wish all parents would take an active roll in teaching their kids about finances. Or about ALL parts of life, really. Personal finance is just a sliver of the stuff we should be learning at home. Reminds me of "the sex talk" actually, but that's for another day ;)
btw, I'm not here to bash teachers, or the gov't, or the banks, or the parents out there – just stating my opinion that it's crazy to be playing stock games over general finance. If I were smarter I'd propose some changes that would help, but for now I just throw it out there in hopes it sparks some little change. Perhaps in somebody who is smart enough to make a bigger difference ;)
J – of course I won! ;)
Why not be part of the solution? If everyone that has posted would volunteer to teach a personal finance class that would start to help.
True – volunteering would help. Personally though, I feel like my 750+ posts on this site will serve the general public much better than me trying to teach a class. (And last even longer being on the internet and all). You'd be amazed at how many students read/email me every week ;)
This post may have been more biased than information-giving, but the bulk of my site is geared towards improving personal finances. 4 hours a day working here will reach far more people than I could ever possibly imagine.
Dude I agree 100%. Basic financial management is more important than even some of the mandatory classes in high school in my opinion. It honestly should be right up there with health, math, and english.
Great post as always J!
Your blog should be required reading in school. I wonder how many of your readers are under 18. What is the demographics of your readers anyhow?
-StackingCash
Haha, wouldn't that be something ;) Here's a link to my demographics according to Wisebread/Quantcast: Budgets Are Sexy Stats. I feel like I get a lot more female viewers than males, but whatev. Pretty cool info.
I remember having to take a 1 quarter life skills/studies class in high school. One of the projects was creating a budget so we understood just how much money we would have to earn to fund the lifestyle that we wanted to have post graduation. We did, however, play the stock picking game in the elective economics class I took; my group was a bunch of slackers so we lost because we didn't buy enough stock. But I went to a private school so YMMV.
I just had to go look up YMMV…."your mileage may vary," yes? tricky one!
Great article and interesting follow up opinions. I think teachers get kids into the stockmarket type games because they appear exciting and glamorous. Budgets, business plans and checking accounts may be important but they take a bit more work to grab kids attention
@JMoney Yes, YMMV="your mileage may vary."
I've been thinking about this post and while it's important to learn the tools necessary to attain fiscal responsibility, it takes a certain mindset to actually implement these things in ones life. Or maybe my friends just have unrealistic expectations when it comes to their finances.
Well, you definitely have to WANT to change your habits before anything can happen that's for sure. You can try and tell me not to drink beer ever again because it's bad for me and I'll have a hangover tomorrow, but it's not going to stop me ;) guess that's how finance is for some people, eh?