How to Teach Financial Adulthood

Sex education is required in public schools – and financial education should be as well, wrote CNN journalist Heather Long in a popular article recently. “The American Dream isn’t possible without understanding how to save, invest and use debt wisely,” she noted, “Yet we mostly leave it up to people to figure what to do with their money on their own.” Certainly anyone who’s tried to figure out what health insurance plan is best for them, is struggling with paying off student loans or saving for retirement, or tried to decipher the fine print of a credit card disclosure can attest that they were less than ideally prepared for the labyrinth of modern financial decisions.

While Long isn’t the first person to write about this important issue, the fact that she conflated money and sex ed helps raise the profile of an essential debate. Whose responsibility is it to provide financial education – schools, parents or both? What are the essential financial skills needed for adulthood?

Long writes that, “The reality is rich kids tend to be a lot more financially literate than working class kids. Wealthy kids learn about money at home — or at their private schools. Poor kids do not. It’s yet another reminder why the “friends and family” plan to learn about money is so flawed.”

I think she’s painted way too rosy of a picture. Most Americans, regardless of economic status, feel underprepared to navigate the complexity of financial responsibilities they must shoulder in the 21st century economy. As a nation, we are still a long way from having some kind of uniform financial education that builds financial capability and prepares kids for the economic realities of adulthood. The Common Core state standards adopted by 42 states do not specifically incorporate financial literacy (although certain math standards do have practical applications).

If you’ve got kids, you cannot afford to wait while society tries to figure this out in terms of public policy. The financial and economic world is only becoming more complex. What can parents do right now to promote financial education at school at and home?

Understand what it means to be financially literate

The non-profit Council for Economic Education has developed National Standards for Financial Literacy, a framework for teaching personal finance in kindergarten through 12th grade. The idea is that a young adult who has mastered these elements has a much better chance of making solid decisions about money and to understand the trade-offs between different choices they will face in their financial lives. The standards cover the basics of:

  • Earning Income
  • Buying Goods and Services
  • Using Credit
  • Saving
  • Financial Investing
  • Protecting and Insuring

The CEE has created lessons teachers can use in the classroom. However, you don’t have to be a classroom teacher to benefit from reading and understanding these standards. Parents can download the standards here and use them as a guide for evaluating your children’s financial capabilities and pinpointing where they could use some extra learning opportunities. Additionally, share them with your school principal and your children’s teachers, including the CEE’s suggestions on learning exercises by grade, which correspond to Common Core standards for language arts and math.

Chances are, if you are reading a financial wellness blog, you already have a good handle on the six categories contained in the standards. However, if you find that some are trouble spots for you, consider putting some attention into improving your own financial literacy. The best place to start is your employer, which may have a workplace financial wellness and/or retirement planning education program that you can participate in with workshops, webcasts, online resources and/or one-on-one coaching. There has never been a better time in history to be a student of personal finance. Free resources are everywhere, including helpful personal finance education sites like the AICPA’s Feed the Pig, FINRA’s The Alert Investor and the Khan Academy, just to name a few.

Don’t assume school-based financial education is enough

According to the CEE’s 2016 Survey of the States, only 17 of 50 states have mandated personal financial education courses for high school students, and only 5 of them require at least a semester of personal finance basics. That’s not nearly enough. Entering adulthood without adequate financial education can often lead to unwanted debt and overwhelming financial stress. According to Financial Finesse’s 2016 Financial Stress Research, 85 percent of employees surveyed reported some level of financial stress, and one in four (25 percent) reported experiencing unmanageable (high or overwhelming) financial stress levels.

Just like with sex education, the best way to communicate financial information to your children is to share your values in an age-appropriate way. This is something that should happen throughout your child’s growing up years. Be open about the financial decisions you make every day and spend time as a family talking about money and the economy. As a basic guide, try New York Times’ columnist Ron Lieber’s book about raising financially savvy kids, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money. There are also many online resources with age-appropriate personal financial games and lessons, such as kids.gov, the Consumer Financial Protection Bureau’s Money As You Grow and practicalmoneyskills.com.

Does your school district have a financial education program? If yes, what do you think of it? Email me at [email protected] or follow me on Twitter @cynthiameyer_FF.

 

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