Learning Personal Finance Beginning In First Grade

[John23]

Here's a specific example of personal finances not being common sense.

I got my credit card statement 2 days ago. On the first page it says..."MINIMUM PAYMENT WARNING:" In all caps. "If you only make the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example:"

Minimum payment (about $87-90). Approximate time to pay off statement balance. 19 years!!

$113. 3 years. Saving about $4,000, lol.

I don't think that's intuitive or common sense. These sorts of examples should be on tests, or in a portfolio required for graduation.

[LauraC]

Originally Posted by Katiana

I recall learning about interest, etc, back in late jr. high or early high school. 8th grade, I think it actually was.

I am very leery about what would be taught in a personal fiance class. Who vets the teachers? Are they in credit card debt up to their eyeballs? Are they going to teach the kids that "the way to get credit is to use credit" and encourage them to charge it, charge it, charge it? Or are they going to teach them that the stock market is evil and one should never go there?

I was thinking in elementary school they are taught by generic teachers and by that I mean one teacher teaches all subjects except for gym and music lessons. Is that still true? They don't switch classes for different subjects? I also wonder if the teachers are right for the class. Are teachers required to take a personal finance class in college?

[LauraC]

Originally Posted by John23

What's taught isn't really reality. Learning about interest in a book is one thing. It's another....do you under this loan document in front of you (for a mortgage or auto loan, or credit card). Look how many people didn't understand mortgages from 2004 to 2007 or 08.

Some of them were stupid, sure. But some of it was ignorance. I think there should be an entire portfolio of personal finance related issues required to graduate highschool. Like filling out a mortgage application. Filling out a tax return. Auto loan, etc. Handling credit card payments, etc.

The information in a class should be objective. People can handle their own finances in different ways, but there should be a set of underlying guidlines or principles taught.

I think it's a conspiracy because personal finances have gotten more complex over the last 20 or 30 years. With very little, if any increase in schooling to address it. You have all these kids taking remedial math in highschool or college. If you can barely add or subtract, you're ripe for exploitation from banks, credit card companies, etc. They want kids that can barely add or subtract. That way, they won't find out it'll take them 16 years to pay off that credit card, paying those "minimums" every month.

I don't think the consequences of debt are spelled out in the average highschool book. It's one thing to fill out a bubble sheet or test paper, and say, this + this, = a lot of debt. It's another thing to live it.

Again, back to the 2000's real estate market. Think about all the big words bandied about...subprime, balloon payments, 80/20 loans, etc. I bet a lot of people that did well in school in the 90's, probably got scammed by some of this stuff because they didn't understand it. I think schools have failed miserably at teaching basic finance. No question in my mind.

It's a conspiracy, because the textbooks are divorced from reality. How many realistic real estate scenarios are in your average highschool book? Probably close to zero. The way they teach interest in the 8th or 9th grade isn't the way banks look at it.

They play so many games with it. Like if you charge 5 things in a day, they'll take the most expensive first. Or the least expensive. Or they'll apply this __, to this balance first. According to wikipedia, banks made $38.5 billion in overdraft fees for 2009. Nearly double compared to 2000. Banks make an obscene amount of money off of people's ignorances.It shouldn't matter who teaches them.

I can tell you that never having owned a house, I know nothing about mortgages. I had an economics class in college but it was tied to the financial news of the period.

[TabulaRasa]

Unsure if it was a state mandate, but my public high school did require seniors to take a class called "consumer economics" in order to graduate, and it did involve curriculum on personal finance. There were other opportunities to take business classes as electives, but this one was a graduation requirement.

Starting early with age-appropriate lessons that teach skills related to personal finance cannot possibly hurt, and they can be embedded across the curriculum and incorporated into all kinds of teaching opportunities at the elementary level. Even behavioral management initiatives in the classroom and at home that are centered around a token economy system help teach these principles from a young age (I have to have so many "tickets" etc. before I can trade them in for a pretty cool prize from the teacher's prize drawer, I need to accumulate x number of stickers on a chart to earn reinforcer z, etc.).

If people learn basic principles of budgeting, economics, being a smart consumer early on, they're more likely to want to learn more on their own later in life.

[Katarina Witt]

My issue is just whose ideas of being a smart consumerr will be taught. Teachers are human. They mirror the rest of the population in their financial activities. So in any occupational group, there are some with too much debt, some who are afraid to take any risk, etc. How is it to be decided what concepts will be taught?

[cebdark]

Originally Posted by John23

Here's a specific example of personal finances not being common sense.

I got my credit card statement 2 days ago. On the first page it says..."MINIMUM PAYMENT WARNING:" In all caps. "If you only make the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example:"

Minimum payment (about $87-90). Approximate time to pay off statement balance. 19 years!!

$113. 3 years. Saving about $4,000, lol.

I don't think that's intuitive or common sense. These sorts of examples should be on tests, or in a portfolio required for graduation.

I get a huge kick out of the tiny print. I take the time to read it. I'm pretty good with reading comprehension, yet sometimes I've got to read it a couple times to fully absorb what it's saying - or more to the point what it's not saying.

That said, I grew up with parents who operated a small business. I was taught to employ a small dose of "healthy cynicism" at the fine print of anything. I find it appalling that laws have to be passed to disclose what you've shown above, but be that as it may, it's what's just happened due to the fact that people were totally ignorant (and/or didn't care) about their finances and most everything collapsed as a result.

My kids have savings accounts, and we teach them about finance, but it is a constance exercise in patience to get them to understand that they have to reign in the "impulse' spending for the larger payoff later. We invest the time in it though because it's important.

Laws were passed because people don't pay attention to the fine print IMHO. Many people blew them off pretty much. I suppose we can go round and around about the reasons why, but really it doesn't accomplish much. It also makes me wonder how many people who rave about gubbmint interference just went through foreclosure and/or bankruptcy because they failed to educate themselves. Such is the human animal I suppose.

This make me wonder if by exposing kids at a younger age to "critically think" about personal finance (other than to teach them how to use a Quicken program on a computer) it would be a good thing. I think it could very easily be incorporated into the math program when learning about decimals for example (and in some programs it does, but others barely touch upon decimals much less money other than to draw a picture of a coin).