Benjamin Franklin once said: “An investment in knowledge pays the best interest.” We seem to have forgotten those wise words when it comes to personal finance. Financial literacy is the foundation of building wealth. If you fail to understand the role of money and how it works in the world, it’s virtually impossible to secure your financial future. Unfortunately, financial knowledge is absent in the education system.
The majority of Americans have not received a formal financial education. According to a new poll from MoneyRates.com, 64 percent of respondents say they received little or no financial education in high school. In fact, only 43 percent of men say they received some or a lot of financial education in high school, while just 29 percent of women report the same. Not receiving lessons about money in high school has damaging effects.
Naturally, respondents who learn about money at an earlier age are more likely to be comfortable with financial topics later in life. Sixty-one percent of adults who say they received a lot of personal finance instruction in high school now consider themselves as fluent in both basic and advanced financial topics, compared to 22 percent for people who received only some but not a lot of instruction. This figure drops to 19 percent for people who received little or no personal financial education.
Most people in the survey believe financial education should be taught in schools in some capacity. Sixty-two percent of poll respondents say it should be a requirement in high school, and a total of 88 percent indicate that financial classes should at least be available as an elective. However, considering how slow change can occur, the responsibility falls on individuals to prepare themselves as well as their children to handle money matters.
Parents should remember that schools are not the only outlet for kids to learn about personal finance. “Financial topics come up all the time when you have kids — just think how often they ask for their allowance. Use those moments to teach them something about the thought process you use when making decisions about money,” explains Richard Barrington, MoneyRates.com. “Also, periodically review your financial situation with your family, because every member of the household has a stake in it. Education is often described as an investment in the future. Nowhere could the potential return on that investment be more clear than in educating students to make better decisions about money.”
Follow Eric on Twitter @Mr_Eric_WSCS