At a recent meeting of the Friends of the Library board, one of the members raised the question of whether our group should, and could, sponsor a series of financial literacy workshops for teens, young adults, and seniors. She expressed concern over the lack of educational outlets for this vital part of living a satisfying life.
There are real-world consequences in not having an understanding of some of the basics: compounding interest, FICO score importance, short-term versus long-term thinking, and even the risks and powers of proper credit use. Unfortunately, it is very easy to not have access to this foundational information.
Each age group faces distinctive challenges in navigating an increasingly complex financial world. For teens, social media and advertising can create a seriously distorted picture of consumption. What you wear and own, how instant gratification is a basic right, and the whole crazy world of influencers is your school.
For young adults faced with building their own life, the "shopping lists" are endless. Housing options, furniture, that big screen TV you have always wanted, maybe marriage and children, a car, and let's not forget any student loan that must be paid for. Credit cards are readily available, but is the knowledge to not get in way over your head?
Seniors have unique challenges: usually a fixed income without many options to bump up cash flow, ever-increasing health issues, expenses, and needs, and even housing for the future. Older adults are a primary target of scammers, out to separate someone from their home, money, or savings.
The board member's suggestion received solid support and will be passed along to the library administration to explore the possibilities. If it can happen, the Friends organization will sponsor the workshops and pay to make them happen.
When I taught a Junior Achievement economic overview class to 5th graders for a few years, I found those children to be blissfully unaware of how this world works. Checking accounts were pretty much a mystery. They knew about credit cards but didn't really grasp that those charges must be paid. Compounding interest on outstanding balances? No clue. Getting a job after school to help the family? Yes, but no real grasp of how a job interview works, or the importance of dependability and being on time.
I fully supported the suggestion of financial education workshops. To me, learning how the world of money works is as essential as a good education in any subject.
While this post is a little shorter than normal, I want your input on what I think is a critical part of growing up, and one that is shortchanged too often by our schools, our media, and even our parents and peers.
How important is financial education? How do we explain money literacy to the young and those of us who are vulnerable to some of its traps? Where can anyone turn for reliable, relatable help?
Hi Bob! I think such a class sounds very valuable. When I was a mentor for local high school girls one of the things they thought most valuable was practice interviewing for a job. As teenagers most of them didn't have a clue. We were also made aware that the idea of a "checking account" or any kind of bank account is also not known--nor the concept of credit cards. Of course, checks are becoming obsolete but they do need to know how (and when) to use an ATM and that sort of thing. Most of all the girls we interacted with seemed disconnected from the idea of money itself--where it comes from, how to get it, when to spend it and most importantly, when NOT to spend it. I certainly believe any of those practical ideas would be extremely good for anyone showing up in class! ~Kathy
ReplyDeleteI am not surprised by your experiences. I think parents may think about money education like sex: the less their kids know the better. Of course, that is completely wrong. Too many adults "shelter" their children in both areas and the youngsters pay the price.
DeleteSchools aren't really the place, either. There are just too many variables and things to cover in the time allowed. So, either at home, or in specialized situations is where this knowledge must be passed on.
Thanks for your support. I hope the Board can put this together.
Excellent response, Kathy. Especially the young women in our consumerism-based society, who are influenced by the social media women. Thanks again for your input.
DeleteMore education is never a bad thing but sometimes I think the ones that need it most will think "this is boring" and drift off daydreaming. When my kids were teenagers, I very consciously educated both my daughters on the importance of paying attention to your money, how banks and credit cards worked, that credit card debt was EXPENSIVE debt, about mortgages and long-term savings. One daughter took to it like a duck to water and is now what her husband calls "the CFO of the family". My other daughter thought the whole thing was boring and I was just trying to stop her from having fun.
ReplyDeleteThey are now both in their mid to late 30s and guess which one still has trouble with money? My youngest daughter has gone bankrupt with credit card debt, which did wake her up to the fact it's not all fun and games, but still struggles to understand how to manage her money. Still, I persevere and once again I am trying to educate her on how to balance a checkbook and forecast her future expenses so that every utility bill payment doesn't become an emergency. She even said to me "They should teach this in school". I agreed but said "If they did do you think you would have listened?" She agreed, probably not.
Is education an answer? Sure, it can't hurt, but it's the old "You can lead a horse to water but you can't make it drink" scenario. The students first have to be thirsty for the knowledge.
I agree completely. Our hope is that those who take such a financial literacy course are motivated by personal or family experience. Sometimes, it takes a series of failures or emergencies to convey the message, As your youngest daughter's struggles show, sometimes even that is not enough.
DeleteWhen we were growing up we had check books with ledgers. Do any of us have a daily ledger like we did in 1980? (Besides Brett 😀 Occasional Nomad) Even going to an ATM to get physical cash is rare. Digital currency is tough to teach. This is not new- hence the student loans and home foreclosures in 2008. Having someone tell you “You can afford it” needs to stop. Even we- with a healthy account- struggle keeping those credit cards from “ringing up” on the web. Are we financially literate? Yes. FI and retired. OW. I was shocked last month when I “got back” $60 on my 1.5% cash back. Mine are now in the drawer in the bedroom!
ReplyDeleteNow talk to people who pay 40% of income on rent, 30% on a car and then try to do anything else.
Yes, Dave Ramsey works. His program depends, at the beginning, on physical cash.
I think someone needs to come up, with a different way of approaching it. I have no ideas. I did teach my own kids to have lots of savings accounts and transfer money immediately when paid. That helped. Now that their food budget is through the roof…the number of savings accounts is dwindling.
We, and any of your prodogy and younger friends are in dangerous times. If you simply pay attention to the ads and social media everything works out. If you live in the real world of inflation, debt, soaring home prices, there are rocky shores ahead, particularly if you don't understsnd how it works.
DeleteTwo weeks of the month we restrict outselves to leftovers and make-do meals based on what is in the pantry freezer, and frig. Pretty inventive and surprising, like ceral for dinner!
I never quite understood the need for teaching financial literacy. I mean, all you need is 8th grade math, and then you can figure it all out pretty easily. But ... I know I'm an old fogey. Things don't work that way anymore. I had parents who went through the Depression, and I'm sure they instilled in me some fiscal sense even if I wasn't aware of it. Long way of saying . . . it's a great idea, and a great thing for the library to offer, maybe even something parents and kids can do together.
ReplyDeleteThanks, Tom (see below). I didn't receive much in the way of direct instruction from my parents, but I paid attention to how they handled finances.
DeleteThrough several times when my dad was between jobs and my mom supported us, I saw them cut back, reuse, and plan very carefully for every expense. Both were youngsters during the Depression. I am sure they learned by example and I learned by osmosis.
Anonymous? No, that above comment is my fault. -- Tom
ReplyDeleteA few random comments . . . Bob, I picked up some early money management skills and my frugal tendencies the same way you did - "by osmosis" from my parents . I don't recall them ever discussing financial literacy but they sure set a good example. I believe a personal finance course should be a requirement for high school graduation. Students who embrace the lessons will have an easier time navigating the world of adulthood. For those who don't, they will have a basic foundation to fall back on should they seek financial literacy in the future. Alan and I talked with our kids about everything at the supper table, including personal finance, but I'm starting to believe that we were in the minority. The stories our kids share (they're in their twenties) about the financial beliefs and habits of their peers are absolutely frightening to me. It doesn't matter why parents don't teach their kids personal finance, the bottom line is that many adults - young or otherwise - are floundering. I think some people will, unfortunately, always flounder due to attitude or ability, but I would hope there would be a solid response to your library's offering of a personal finance course. I believe that a lack of financial literacy impacts people at every stage of life but early (when entering adulthood) and late in life are the two most devastating times. Due to the way my brain is wired, I actually enjoy handling our finances and investments. But Alan and I pay the bills together on occasion to keep him in the loop, and we always discuss and agree on investing moves before I do anything. Just as frightening to me as young people with no understanding of personal finance are older people who become complacent and oblivious to personal finance when their spouse handles everything. That can be a recipe for disaster if the finance person becomes incapacitated or passed suddenly without time to prepare his or her spouse. It would be interesting to see the age mix of people who express interest in and attend a course at the library. I hope you'll keep us posted if it comes to fruition.
DeleteLike you, I handle the finances in our household. I enjoy it and do well enough to keep us comfortable.
DeleteStarting last year, we made sure Betty had two credit cards with her as the primary account holder. If I die before her, the cards where I am listed first will be cut off. By having her own cards and her own FICO score, she will be protected.
Also, all investment and checking accounts are either joint or TOD (transfer on death) to make sure the person left behind isn't financially stranded.
These are the kinds of subjects that should be covered with all married couples, and would be in a financial literacy course.
I came from the School of Have Not on a subsistence farm where everyone worked for what we had. My parents got jobs off the farm when they built a new house and monthly utility bills became the norm. We may have wanted more but we certainly had enough. I see people of all ages spending like there's no tomorrow, buying the latest thing, going out for meals on a regular basis, vacations out of the country, refusing to eat leftovers, throwing away food. When these people complain about finances, I can only shake my head. I think it's important to distinguish between wants & needs. I've learned to like what I can afford. I can honestly say that my frugality has afforded me a very good lifestyle. How do you teach common sense?
ReplyDeleteHow do you teach common sense? Great question, particularly in a world that is constantly saying " Do You."
DeleteThe messages we receive are cleverly designed to appeal to our emtions, not our logical selves. Without experience to counter those siren songs, younger folks are easily trapped in a cycle of wants and debt.
Once that hapens it is very hard to change that pattern even as one ages.
This post is near and dear to my heart. When my kids were in high school, there was a class in financial literacy -- it was excellent. However, I think they learned most by being in charge of their spending money. Beginning around age 11 or 12, I gave each child a fixed amount on the first of the month. I paid for a roof over their head, food on the table, and education. They had to budget and pay for everything else. (Yes, I treated them sometimes on family outings and such.)
ReplyDeleteFor example, my birthday gift for my daughter's 13th birthday was permission for her to buy a cell phone. I did not put her on my plan. Suddenly she was interested in learning math as she spread out all the brochures from cell phone plans and started comparing prices for prepaid plans. (I know things are different today when a cell phone might be seen as a necessity for a child.)
My kids became good money managers. They knew that the first of the month payment was it for the month -- no advances. So they had to budget and plan ahead.
They were also motivated to get jobs to supplement their monthly stipend. My daughter, for example, started a babysitting business when she was 12. She handled it all herself.
They also became discriminating shoppers, deciding what they really wanted and looking for good deals.
I also helped them open bank accounts so they could save.
I might add that I retained veto power over their spending choices to discourage purchases of inappropriate things. I rarely had to use it. I did not use veto power to prevent wasteful or poor choices -- that was on them -- only things that were safety issues, or inappropriate clothing, for example.
So yes, I am a firm supporter of your financial literacy education plan. Good luck with it!!
If I just printed out your approach and handed it to the students, my job would be done! Today, helicopter parents delay the maturity of their offspring by shielding them from all consequences of their decisions.
DeleteIt is interesting how things have changed over the years. As you note, a smartphone is pretty much a necessity for teens today. It is the way they stay in touch with friends and parents. As a grandfather, I feel better knowing i can text or call one of the kids if need be.
Do parents still let 12 year old's baby-sit? It is a very different world, so i don't know if this is something that continues. I know I wouldn't want my granddaughter of that age taking on that responsibility and level of danger. Of course, back in the day I earned money babysitting, too, and i was probably 12 or 13 when i started..
I do think it's a fabulous course to offer. Would I, as a teen attended? Nope. It would be great if it were a mandatory HS grade 9 class. Having received our financial guidance from the in-laws who appeared to be living a great life, drove us to the edge of bankruptcy in 1987 when the Reagan tax laws took us to our knees. In-laws were terrible money managers and a full mortgage on the home purchased in 1979 (where is that scream face?) They have no business teaching $$$. Kids are subject to the skills of those around them.
ReplyDeleteWow, horrible sentence construction. Sorry about that everyone!
DeleteIn addition to other age groups, the course would likely be offered to the teens who already volunteer at the various library branches. They are highly motivated and well organized. You are correct: most teens would not take advantage of the opportunity.
DeleteI think that type of education is imperative for any age. I was lucky to have parents that practiced what they preached and I learned good money management from them. I really don't remember getting those types of practical lessons in school.
ReplyDeleteNow, as a senior, I'd love to know more about the various types of virtual payment - how they work, how to protect yourself, etc. That seems to be the direction things are going.
You raise an important issue: helping seniors adapt to a largely online world. One of the latest offerings is a way to use a virtual credit card number instead of your own. That eliminates the ability of bad actors to steal your information when you order something online.
DeleteHarry here ,who is the same age as you.My wife and I were always frugal and only bought what we needed. We retired before we were 65 and started biking and travelling all over the USA and Canada.We have to take out 4 % out of saved pensioen every year and we do that at year end.I had a visit with me financial advisor in September .After the financials report he asked if I had a wish list of things to do.After some thought I said my wife and want to visit Newfoundland.Then he said “do it !”Went home a booked a trip for a week later!And we were in Virginia in April and Indiana and Michigan in July.We celebrated our 50 year anniversary aa well and there is still money in the bank!Also we donate 10 % to worthy causes and we have more than enough left.
ReplyDeleteYou are in great financial shape and having fun making all sorts of memories! If you're biking then you are in good health, too.
DeleteWe withdraw only the RMD each year in January. Between that and SS our everyday expenses are covered.
For charity, I discovered the joy of using part of the RMD as a Qualified Charitible Deduction. Money that is given to qualified non-profits is not taxed as part of the RMD from our IRA. So, I can give to the charities we would normally support but with before-tax money. Everybody wins.