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The following is a guest post by Eva Baker of TeensGotCents.com, who is (in my opinion) a very wise high-school student for getting started early learning about personal finance. I’m very excited to have her guest posting on my site today. I hope you’ll join me in welcoming her as well!
Personal finance is in a shambles in America. On the news and in daily conversation, you hear people talking about credit card debt, student loan debt, and how difficult it is to save any money in this economy. Over the last few years, many of my friends have have had a parent lose their job, I know families that have lost their homes to foreclosure, and teens are having a more and more difficult time finding a good part time job.
One might think that these terrible circumstances would lead to an urgent move on the part of parents and schools to teach their children, particularly high school students, more about personal finance. But, you would be very wrong. Few states even offer personal finance classes and even fewer require such a class for graduation.
In 2011 Charles Schwab released a study called, “TEENS & MONEY SURVEY FINDINGS: Insights Into Money Attitudes, Behaviors, and Expectations of 16- To 18- Year-Olds.” What the study shows is very interesting and is at times, quite entertaining. It reveals that 93% of teens say that their family has been directly affected by the recession and that 75% of them have had a conversation about their family’s financial situation in the past year. 73% of those teens believe that it is important to have emergency savings in case a family falls on hard times. What was most poignant about the study to me is that fully 86% of teens say that they are interested in learning about money management in a class instead of making financial mistakes in the real world. Unfortunately for them, only 14 states currently offer such a class (if you’re interested in reading up on which states offer personal finance and economics education classes, click here and go to page 8).
The entertaining part of the study? Well, most teens think that we are going to earn an average salary of $150,000 a year. (Of course I am, duh…) We also consider ourselves to be ‘financially savvy’, but hardly any of us teens even know what a 401(k)/Roth IRA is, how income taxes work, or whether or not using a check cashing service is a good idea. Those things are kinda funny, and at the same time, not so much. A check cashing service? Now that isn’t funny at all. And don’t even get me started on paycheck advance places. Someone should tell teens to stay far, far away.
In an article for US News and World Report titled, “Why Most High Schoolers Don’t Know How to Manage Their Money,” we find out why many teens don’t have the answers to their questions. Apparently there is ‘discomfort among teachers and parents’ and neither group feels qualified to teach teens the basics of personal finance. The article quotes a person named Morrison of the Council for Economic Education saying, “To say it’s a parent’s responsibility seems unfair—unfair to the parents and unfair to the kids. You can’t ask people to be responsible for teaching something if they haven’t received the education themselves.” Really? To be honest that just makes me mad. So, if my teachers don’t feel comfortable and neither do my parents – just where am I supposed to learn anything about managing money? (I have all sorts of snarky things to say here but my mom told me I have to be nice.)
I completely disagree with that kind of thinking. I believe it is the responsibility of parents and teachers to help us as teens understand the basics of managing our money. You don’t have to be an expert, have a finance degree, or go through a year of specialized training in order to teach those basics. Thankfully, this gap in education is not going unnoticed. The Council for Economic Education reports that fourteen states now require students to take a personal finance class in order to graduate. According to CEE in the News, local groups such as the Chattanooga Area Chamber of Commerce are also doing their part to help educate students. They recently sponsored a “Reality Check” event which is an exercise in real life budgeting and money management. Even though students may not understand everything in the class, they did walk away with a greater appreciation for the cost of living and how education affects earning ability.
Some of my earliest memories about money involve managing that money. My parents made up three envelopes for me, and I had to choose each week how much of my allowance would go into each envelope. My choices were savings, spending, and giving. It really doesn’t get much more simple than that. Early training has helped me appreciate that money is a tool and I am the one responsible for making purposeful decisions about what I earn or am given.
If you are a parent or educator, I urge you to get involved now with your students so that they can learn these basic principles. If you have or are struggling yourself, be transparent with your kids and allow them to learn with you so that they don’t make the same financial mistakes you might have made. If you are a teen, talk to your parents. Don’t be afraid to tell them that you have questions and want to be educated on all issues of handling your money well.
Teens may not know what we don’t know, but we deserve a fighting chance.
Aside from that, I’ll leave you with the following cartoon I found while writing this post. It was a good reminder for me of the importance of open communication between parents and teens.
***Cartoon displayed with special permission from http://www.glasbergen.com
How about you all? Did you learn about personal finance in school or from your parents? Or, did you have to teach yourself through trial and error?
How do you think the personal finance education system in US public schools could be improved? What roadblocks do you see to prevent its implementation?
Share your experiences by commenting below!
Eva Baker is a high school student passionate about preparing for her financial future and helping other teenagers prepare as well. When she isn’t rock climbing at the gym or pinning ideas for her non-existent wedding, she documents her financial journey over at TeensGotCents.com. Find her on Facebook and Pinterest as well!