As many of you probably know, April is financial literacy month. This is the 30-day period we’re supposed to be teaching others, particularly our children, about developing sound financial habits. As a person who teaches kids for a living and blogs about finances as a hobby, you’d probably think that I’m a huge advocate of requiring a financial education courses for high school students. In fact, the state that I teach in will be mandating such courses as a graduation requirement starting next school year.
But, no. Actually, I don’t think it’s that great of an idea to teach financial literacy to high school kids.
It’s not that I’m against financial literacy courses for high school kids; I seriously doubt that requiring kids to learn about 401(k)s and credit card agreements will detract from their overall educational experience or cause some sort of intellectual harm. I wouldn’t speak out in protest of a financial literacy class or make a fuss about introducing a personal finance course in my school. I just think that peoples’ expectations about what these types of classes will accomplish are totally overblown.
As a reaction to the financial crisis, a number of states have begun requiring high school students to successfully complete financial literacy courses in order to graduate. One of the reasons cited for the onset of the Great Recession is that a lot people didn’t understand the implications of the financial choices they were making – such as, for example, what an adjustable rate mortgage is and what happens to one’s monthly payments when rates adjust upward. So, the theory goes, if we educate people (kids) about finances, our future won’t be filled with a bunch of ignorant financial consumers who will make the same mistakes that people did in the lead-up to the crash of 2007.
As ideas go, this one doesn’t seem bad. I just don’t think it will work, for one simple reason: most people don’t care about anything that they’re not actually dealing with right now. Right now, for example, I don’t care about home buying or wedding planning or breastfeeding because none of those things are happening to me right now. In the future, I might. But not today.
The key problem here is relevance. Stock options and emergency funds and shopping for renter’s insurance simply aren’t relevant to high school kids because most aren’t facing those choices/problems right now. Sure, a lot of high school kids have jobs and some are probably saving a good chunk of money for college or a car or their senior trip, or perhaps they’re even contributing to their family’s finances. But most of the topics covered in a personal finance course are totally irrelevant to a high school kid’s current situation, making it unlikely that most students will take the course seriously enough to gain any real, usable information from it.
Before you get all “but there are some kids that will learn something, and we need to at least be sure the information is getting to them!” think about this: it’s really hard to get most adult Americans to take retirement planning seriously because retirement seems so distant. Most people take an “eh, retirement’s so far off” attitude, even in middle age. That’s why so many retirement plans have a “catch up” option for people over 50. And yet, there’s information all over the place about how important retirement planning is. So a lack of information isn’t the issue. It’s a problem of relevance. Unless we feel a topic is relevant to us, right now, all the information in the world won’t impact our actions.
So I guess we could try teaching financial literacy to high school kids. But I feel pretty confident that these classes won’t produce a generation of personal finance wiz kids. In fact, I don’t think financial literacy courses will much of an impact at all.
Do you think financial literacy should be taught in high schools? Explain!