We would all like to make plenty of money. Money good. Poverty bad, right? And of course, once we have it, we would all love to know how to manage that money so that it grows rather than turns into old Porsches, beach home rental receipts and alimony to ex-husbands.
Unfortunately, many of us don’t fully realize the levels of our own financial ignorance until we are 25 years old, three years out of college, living with two roommates in a small, dingy apartment and continually on the lookout for great new Ramen recipes. And really no clear way to climb out of the financial hole we’ve dug.
Millions of young Americans are in a bad place when it comes to understanding their personal finances. Are our high schools failing our kids in this regard? Should high schools be responsible for shining a hard light on the potentially grim realities facing those with low earnings power in today’s hyper-competitive workplace?
In theory, our school system was designed to prepare students for the real world. It provides them with valuable skills, shapes and nurtures their industrious attitudes toward the work that they do and then sends them to secure employment Strangely, however, only a single semester is generally set aside to teach high school students about the entire study of economics - something that greatly affects us all, regardless of vocation. And in many cases, it’s just “home economics” – which is great – but is meaningless when it comes to garnering a philosophy about long term buy and hold investing in equities.
The resource imbalance doesn’t make sense. Sure, all the other subjects being studied are important, too, but where’s the balance? Should kids really be spending as much time in a metalsmithing elective as in a class that will give them the tools to prepare for their financial future? Is the world sorely in need of more hammered pewter rings?
Rather than just the cursory overview of economics currently the diet of the average student - often not until their senior year - shouldn’t students really understand the basics of: Stocks and Investments. Stocks and Bonds. Does any teen you know even know what a stock or a bond is? We bet not.. Even some of those who become employed and are contributing to a 401k still think 401k is a brand of jeans. Without a philosophy or long term strategy, they risk the pain of Wages and Unions. If an individual is going to be entering the work force, it certainly would be nice if they knew what they were getting into. It’s important to understand such concepts as supply and demand, wage determination and the organization of unions. The more knowledgeable an employee is, the better and more informed decisions he can make. Hopefully he got all of his bad decision-making out of the way in high school.
• Taxes. Just because someone doesn’t have cause to fill out a tax return before they leave high school doesn’t mean they shouldn’t be prepped well in advance. Taxes are a beast. As you know. And while you certainly have the option to pass everything off on your friendly H&R Block guy, it’s critical that you understand what all those numbers, lines and boxes mean. You don’t really want some pencil-pushing stranger to have that much control in determining your net worth, do you? Even though he seems to know how to wear a pocket protector with panache?
This is, of course, only the tip of the financial iceberg. Students should also have the opportunity to learn about banking, economic policy and international trade. But there’s just not enough time in a single semester to dedicate sufficient attention to such a complex and intricate field of study. There are more options available at the college level but, sadly, there are many who never make it that far. So maybe we can have our kids put the metalsmithing on hold for a while. Aunt Henrietta will live without the handmade charm bracelet.