In an election year, many issues vie for our attention. Complex matters like healthcare, social security, and taxes — that inspire endless opinions but have no easy solutions — are debated daily. One issue that we should all agree on without any debate: the need for financial education in schools. As a country we are failing in financial literacy. We owe it to our children to provide them with the best opportunity for a brighter financial future. By giving them a stronger grasp of the basic principles that can help them achieve their dreams — and avoid financial nightmares — we can help our nation as well.
Americans, on average, were able to correctly answer just three of five questions about fundamental financial concepts, according to a FINRA capability study. And less than 25 percent of students say they are prepared to deal with the financial challenges that await them in the real world. Yet while Treasury Department research shows that high school graduates in states that mandate financial education have higher savings rates and a greater net worth than graduates from states without financial education, only 12 states require that students take a personal finance course to graduate.
It’s up to all of us — parents, schools, government, private sector, and public sector — to give students the tools they need to succeed. We must take steps to ensure that our kids remain competitive and prepared for the future.
First, financial education starts at home. But parents are often uncomfortable talking to their kids about money, in part because many of them lack confidence in their own financial acumen. For many parents, it’s easier to talk to their kids about sex, drugs, and alcohol. Here are some easy things we can do as parents to reduce the discomfort and start the conversation:
Use everyday experiences to talk about money. For example, use tax season as a reason to talk to kids or engage them in the process of budgeting for vacations.
Talk to your kids about money by using milestones like saving for something special.
Tell them about money mistakes you made when you were younger and what you’d do differently now.
Second, schools need to start making financial education a priority. Studies show that teachers want to provide personal finance instruction, but relatively few of them — only 20 percent – believe they have the capability to teach it. Today, 38 states may or may not be teaching the next generation about basic financial concepts, which are critical life skills they will need as adults. There are tools to help schools and teachers. For example: