Why Personal Finance should be Taught in High School

America’s young adults spend four years of high school planning for that big day when they graduate and leave home for bigger and better opportunities whether it be college, married life, or the work force. There seems to be a general expectation that the basic necessary skills they may need for their future endeavors have been acquired in those four years. However, there is one major subject that seems to be lacking in many of our high schools across the country: Finance.

In a nation where the number of bankruptcies continues to rise, credit card debt is at an all time high and the divorce rate due to money issues in the marriage is also at record levels, why are we not teaching our young adults how to manage money?

Many young adults are getting jobs beginning at the ages of 14 to 16. At this time in their lives many do not have the understanding of money management because they have not been taught. Very few open bank accounts and those that do don’t know how to manage them. When opening a standard savings account at many of our financial institutions there are certain regulations that have to be maintained. For instance many institutions require a minimum balance or a fee will be assessed. The explanation of these rules and regulations are often skipped or are overseen by the overly excited teenager. So what happens the account balance is overdrawn or falls beneath that limit and here come the fees.

Now these same young adults have turned 18 and are opening their very first checking accounts. Not only are they given a set of checks to write against the account more often than not they are given a debit/credit card that is attached to that account. The frightening this is that many of these adults don’t know how to write a check, balance a checkbook, or just plain monitor their funds. It becomes so accessible and easy to swipe the debit card through the machine and go on their merry way that the effort and time is not taken to write down that transaction and keep watch of the balance. Money becomes an unseen object with the presumption that it is just there in the bank.

Accounts are becoming overdrawn, excessive fees are being assessed, and the owners of those accounts are becoming overwhelmed and falling into a vicious cycle of poor money management. Why has the time not been taken to prevent this from happening and aid our young adults in proper money management?

On another side of money management there is the infamous credit card. Young adults are being sent credit card applications at an astounding rate. These cards offer them low interest rates, no annual fees, high credit limits, etc. Well at least these are the words our young adults are reading. What about the little pamphlet tucked deep into that envelope with all the fine print explaining the “real” terms? Well this pamphlet is overlooked and the spree begins. Young adults are paying for common household bills, groceries, gas, the latest shopping trends, etc on their credit cards. There’s a promise of 0% interest for 1 year. So debt is being racked up quickly with the notion that there is a year to pay it off.

Unfortunately, that is not always the case and exactly 1 year later that $3,000 of debt has turned into a nightmare. That 23.99% interest rate has taken affect so the finance charges are quickly abounding. The minimum payment is skyrocketing as is the balance so much that many times that minimum payment becomes unpayable then welcome in late charges and over the limit fees. What was $3,000 of debt has turned into almost $5,000 and continuing to grow with no end in sight. Why has the time not been taken to help students understand credit cards and debt?

Now 5 years down the road they are no longer students but adults, many who are married and in successful careers. However, that credit card debt may still be looming in their lives and what may be worse yet is that they may have married into even more. And on top of that they are facing mortgages, student loans, or retirement. Many of these couples (or single adults) don’t even know how to make a budget let alone how to manage paying all their bills and still have enough to put away in a nest egg.

And as they continue to grow older things seems to compile and the list of bills never ends. Then suddenly they welcome the thought of retirement to find out they have no money. Why has the time not been taken to help them create a workable finance budget?

As voters, taxpayers, or citizens, we continually complain of the debt in this country. The number of bankruptcies is at a record high as people are seeking to get out of the vice grip of debt. But who actually ends up paying for their debt in the end? We complain that social security is a system that will eventually fail as the number of people being paid out exceeds the workforce. How great would it be to send our young adults into the world with a solid notion of money management? The terms checkbook, budget, money market account, interest rate, fixed rate, stock market, equity index, IRA, diversified portfolio, even life insurance, etc are missing from the vocabulary of many of them.

By taking the time in high school to educate our students in the basics (maybe even more elaborate) we can ward off the damages later in life. By simply explaining the importance of maintaining a 401K or investing in an IRA for the future we can help prepare American citizens to live life without social security because they would have been able to provide their own security. (By no means am I speaking of eliminating the social security system, but trying to enable young Americans to grow up with the notion that there can be more out there for them to retire on.)

Imagine the number of marriages that could possibly be saved as finance problems are one of the major causes of divorce in America. Imagine the bankruptcy rate falling as American consumers are paying with cash and avoiding the credit card trap all together. Imagine the home foreclosures that could be avoided because there was a nest egg that would help someone get through the rough times in unforeseen tragic events. Imagine the young child who would continue to grow up without the worry for money and be able to afford college because when their parent passed away they had a life insurance policy. Just imagine a more financially stable group of Americans.

We can make a remarkable leap towards obtaining these goals if we could instruct and educate our young adults earlier regarding money and finances. We find the time to teach our kids about English, Math, Reading, and History. We must find the time to include Finances. What a difference it could make.