Financial education is something every child should learn about, but the adults don’t talk openly about it; you know, like sex education. I graduated high school knowing very little about having a bank account (and thanks to sex ed, I knew a little bit about how babies are made). Saving money was rarely part of lunchroom conversation, how credit cards work was never mentioned, and whatever the “stock market” did was a mystery.
In college, I was one of those kids who could be easily targeted by credit card companies for scammy credit cards. And targeted I was! I racked up a hefty debt of over $5,000 by graduation. Little did I know that the low interest rates balloon after a short period. By the time I started to earn (very meager) money, I was swamped with more credit card debt than my wages could cover. Then I stopped earning (very meager) money and went to graduate school, where the debt kept growing.
It took me years to get out of that mess. Of course, personal choices that involved (ahem) “fun” were a part of the problem. But I was an idiot. Everyone is, in that period of life between eighteen and twenty-five. You’re technically an adult, but functionally an idiot.
I wonder what would have happened, though, if I had been warned about credit card companies—about how they lure you in with low levels of interest and then trounce you with astronomical annual percentage rates when the honeymoon is over. I wonder what would have happened if I had understood anything about budgeting, saving, accrued debt, compound interest, money market accounts, or just exactly how you’re supposed to pay off debt.
I wonder what would have happened if I had understood anything about budgeting, saving, accrued debt, compound interest, money market accounts, or just exactly how you’re supposed to pay off debt.
Recently, the Michigan House of Representatives passed a bill guaranteeing high school students a personal finance class before they graduate. Hoorah! It’s about time. In fact, fourteen states now mandate financial literacy at varying levels of intensity. But if you ask me, it’s super weird that it’s not mandated across the board.
Hilarious side note: In Michigan’s school districts, the financial literacy class can count toward the foreign language requirement. Which makes sense, because the way our financial system is structured has always been Greek to me.
But one troubling trend about the financial literacy programs that are available is that they’re sponsored by banks and financial institutions that want to market themselves to youngsters. That’s the kind of conflict of interest that only benefits financial services companies and may harm children.
An even more troubling trend also surfaced recently when Jay-Z announced that he’s partnering with former Twitter CEO Jack Dorsey to teach residents in the Marcy Houses in New York City about cryptocurrency. He’s calling it The Bitcoin Academy, and classes will be free. There will even be a “Crypto Kids Camp” for kids aged five to seventeen. I’m not sure what that will entail, but I’m hoping there’s at least some water sports.
Let’s just take a moment to ask . . . crypto? Really? Shouldn’t these kids learn about real day-to-day financial tools before they learn about volatile blockchain currencies that may not make it?
It’s true that the traditional banking system has exorbitant fees, but they pale in comparison to the world of crypto. What about FDIC insurance? Shouldn’t these kids enjoy some protection?
How about teaching kids about credit unions—the nonprofit alternative to the banking behemoths? Shouldn’t we all be learning about TAXES? That’s something that happens to nearly everyone in their adult lives, and yet there are no programs geared toward this. We have the most unnecessarily complicated income tax system in the world. You have to figure out what you owe and hope it matches what the government knows. It’s a psychological head trip that always makes me feel like I’m accidentally committing a crime! But I’m not doing crime, I’m just trying to do taxes that nobody taught me how to do!
Engaging in the financial system forms a huge part of any adult’s day-to-day life. We should teach to that—not in a way that big banks benefit, and not in a way that kids learn about potentially ruinous cryptocurrencies. We need to teach them how to actually financially operate in the world so they have a fighting chance to thrive.