Why isn’t financial literacy taught in schools?
By Nicky Sullivan
Not one single human being is exempt from needing to know how to manage their money. Financial literacy offers life-altering knowledge that has the power to take you anywhere you want to go.
Yet our schools - and even our parents in too many cases - seem to think we’ll just somehow pick it up out of the atmosphere, a little like influenza. Financial literacy is the gift that never stops giving. It never stops growing and never stops making positive contributions to how you live your life.
We would never denigrate formal education — we love school! No, really, we do. They might not be the best years of your life, but they’re up there. But we have to ask about the point of a formal education that enables people to work hard for a lifetime, without teaching them how to make that money work hard for them too. It’s madness.
The research is discouraging. Americans owe more than $1 trillion on their credit cards. Student loans amount to even more than that, at $1.4 trillion. General financial literacy levels among America’s youth has been declining since the 1990s, and it wasn’t great then either.
A 2018 University of Illinois study found that 36% of young adults were financially at risk. Less than half of the whole population has enough saved up to carry them for three months, in case they lost their job.
A National Endowment for Financial Education study found that just 24% of millennials can demonstrate basic financial literacy. In a stark example of the Dunning-Kruger effect (when you know so little that you don’t know that you don’t know what you don’t know), 69% of those surveyed rated themselves as being highly financially knowledgeable. It’s possible that you are one of those people!
We’re not here to judge anyone. To us at iamMoney, the failure to fully prepare young people for the lifetime of financial planning ahead of them is almost criminally negligent. Yet, even now, less than 16% of US students are required to take a financial literacy course in order to graduate high school - which is why we’re doing everything in our power to help fix that.
Collectively, the people of the United States earn more than every country in the world, accounting for almost one fifth of the entire planet’s economy (by GDP). But they are not maximising its benefits. Americans lag behind on global savings indexes, in preparedness for retirement and on debt management.
This doesn’t even count the little things, like understanding how to choose the best mobile phone plan, let alone the really big things like getting a mortgage. These are decisions that have a huge impact on your quality of life, and who you get to spend the rest of that life with.
This month, the Chinese government announced that it is introducing financial education in its schools in order to teach its people about risk awareness, self discipline and an understanding of what it takes to make sound financial decisions. This isn’t just for the benefit of the individual students concerned. China has recognised that the entire economy benefits when its people are able to navigate an increasingly complex economy. And so should all governments.
We can’t count on parents to teach their kids how to do this. Many of them lack the skills themselves and it’s not fair for their children to be saddled with the same burden. Moreover, the world is different from when they might first have sat down to reflect upon this. Some studies show that parents are the first to benefit from financial literacy programmes in schools.
Many reasons have been given for why financial literacy isn’t taught at schools and none of them stand up to scrutiny, in our eyes.
Arguing that teachers don’t know how (train them), that the subject is boring (uhhh, trigonometry anyone?), parents want to teach their kids (and what about the kids whose parents don’t, or can’t assume that responsibility?) just don’t stand up in our view.
It’s never too late to address the gaps in your own financial education (whether or not you even know that they’re there). We’ve made it easy for you on www.iammoneysmart.com Check it out and start learning. It’s fun, easy and can be done at your pace, whenever and however you want. What is guaranteed is that if you complete the programme, your life won’t be the same again.