“I wish I’d learned something useful in school, like how to file taxes.”
“[Investing] is great. I wish they’d taught us how to do this in school.”
Photo by Ivan Aleksic on Unsplash
These are two examples of things I’ve heard a lot of recently: A criticism of how finance is taught in school. And along with these criticisms come calls for teachers to incorporate new lesson plans into their curriculum.
Indeed, in recent years several states have started to pass legislation requiring some sort of financial literacy class to be taught in schools.
On the surface, this makes sense: Teach children what to do with their money, and how money works, and that will help many people get out of poverty.
“Learn the rules of the game,” the premise seems to be, “and you’ll win.”
Unfortunately, that’s sadly mistaken.
The problems with curriculum
The issues begin right away: What curriculum do we teach in schools?
There is no simple answer to this question, for a few reasons:
The financial world is constantly changing
Every decade new financial tools and strategies become available to ordinary people. Roth IRAs were only developed in 1997. In financial terms, that’s barely the blink of an eye.
School curriculums can be notoriously difficult to create and approve. Textbooks can take years to write, and that’s for subjects that are reasonably stable.
Imagine taking a class that teaches you how to prepare your taxes, but then the following year Congress decides to revamp the tax code.
As part of my home economics class in the early 2000s, I was taught how to balance a checkbook. I have never again used that skill. School did not keep up with new technology. Now, online logins to bank accounts automatically tell us that information at will.
What I’m saying is this: Finance and technology are increasing at a faster and faster rate. No matter what, schools will fall into the trap of teaching obsolete material.
What would be the correct curriculum?
What would be the goal of the school’s curriculum?
Here at Plan & Act we seek to get people to FIPOM. Financial Independence and Peace of Mind. And that means that every plan we create, along with the educational content we offer, is unique to each client.
Each student would be unique, and teaching the wrong content could be irrelevant, or actively harmful to the student.
It would be like someone with a heart condition going to a health class. And in that health class, they receive an entire lesson about how to run the fastest. If this person tries to put it into practice, they could seriously hurt themselves.
We’d be putting a whole new level of pressure on teachers
Finance is complicated. Anyone licensed to work in the financial field has had to spend hours studying to receive their licenses.
Currently, I’m in a course to get my CFP® Certification. There are seven thick textbooks to work through for this course on various areas of financial expertise. And frequently throughout the book I’ve read “This is a subject beyond the scope of this course.”
If the course to gain expertise and mastery of a field is willing to admit that there is much that it won’t touch on, what hope will teachers have of mastering the subject enough for their students?
How will parents react to the homework?
The recent addition of Common Core to classrooms sparked outrage among parents who found themselves unable to adapt to the new ways of doing math (In The Incredibles 2 the father screams “Why would they change math? Math is math!”).
The Common Core method of doing math was shown to better reflect how people actually do math in their heads, but the damage was already done. Five states voted to repeal Common Core with more Under Review.
I don’t think anyone would like to receive indirect criticism of their accounts from helping their child with their homework.
A better way forward
It starts with what we already have
Everyone hated math, as far as I could tell. It was abstract, and seemed pointless.
But in those classes we can find a better solution to our financial literacy problem.
Algebra and geometry are fundamental in understanding basic finance. If you have X dollars and you spend Y dollars, how many do you have left?
If you get anything other than a positive number, you’re in financial trouble.
See how simple it is?
We don’t need a whole new course in schools on financial literacy, we need to make the current classes more relevant to students.
Tax forms will constantly change, but they are ultimately addition, subtraction, and at the very end, multiplying a number by a percent.
Investing seems trivial at first (“I’m putting $10 a week aside? That’ll only be $520 by the end of the year.”) until you look at it through a geometric lens (“Oh, by the time I retire, that’ll become $61,000!”).
Math is the bedrock of all finance. Math is also a great fear of many people who come to us. Focus on those math classes, make them more relevant to people’s lives, and positive financial habits have a better chance of happening.
It starts in the home
Just like with every other subject, mastery of finance starts in the home. A financial curriculum won’t matter at all if students come home and their parents are living financially unsound lifestyles.
Children learn through imitation. The best way for students to learn what to do with their money isn’t going to be from a textbook – it’s going to be through what they experience through their parents.
The best thing parents can do for their kids isn’t to demand new financial courses. They should be looking for ways to learn themselves.
There’s too much to say briefly on this topic. Another article will have to be devoted on the important role that parents play in their children’s financial well-being. Suffice it to say that a parent’s ability to demonstrate FIPOM directly correlates with their child’s ability to achieve FIPOM as well.
It starts now
If you’re reading this, and you’ve found yourself wishing for more financial knowledge, but you haven’t taken steps to get it, ask yourself: What’s been in your way?
How can we expect children to take actions in their lives that we won’t?
If you’ve found yourself wishing for a way to learn more about finances from a source you can trust, I invite you to sign up for a Free Bronze Account. A licensed advisor will reach out to schedule a meeting with you and see how you can best level up your financial know-how.