Would you consider yourself to be knowledgeable about money? Financial literacy, or a lack thereof, is blamed for many Americans’ financial blunders. You need to know not just how to budget, save, and properly use a credit card, but also the ins and outs of interest rates, investments, and how to make good decisions. This will help you become a good financial role model for your kids, and make wise financial choices when you hit your 20s and 30s.
But the clear issue is that Americans are largely lacking financial literacy. And a new study from PricewaterhouseCoopers all but proves it.
The study, which includes surveys K-12 teachers and parents, focused on how little we actually teach our nation’s youth about finance and money, and who we feel is responsible for doing the teaching. As you probably won’t find surprising, the majority of those asked felt that American schools need a serious uptick in financial education — but even teachers who want to see more of it don’t feel qualified or comfortable teaching it.
To see the entire study, you can download it directly from PwC.
To get the inside scoop on the report, The Cheat Sheet talked with Shannon Schuyler, chief purpose officer at PwC. Here’s what she had to say.
The Cheat Sheet: Can you tell us what financial literacy actually means? Does it just refer to money?
Shannon Schuyler: For us (PwC), it’s really making sure that people have the behaviors that they need in order to make wise financial decisions. I think people think of “financial literacy” and immediately, they think of dollars and how to mange their money. But financial literacy, at the base of it, is about behaviors. Having an appreciation of delayed gratification, and long-term versus short-term thinking.
That’s why it’s important — in the elementary schools — to not do exercises with coins or dollar bills. We need to make sure that they’re making good decisions. Well thought-through decisions.
TCS: So, we should think of “financial literacy” as more of a set of behaviors, not just a broad set of knowledge?
TCS: The study says that many teachers don’t feel comfortable teaching about financial matters. Why is it that we are seemingly so unwilling to get this into the curriculum?
Schuyler: There were two barriers (mentioned by teachers) that really caught me — the lack of curriculum, and the lack of knowledge, or qualified teachers. Those are things we have seen since the beginning of people talking about teaching financial literacy in schools. The two I’m more surprised about… first, teachers knowing that parents need take-home materials. Knowing that there are issues that are seen in the home — but what’s seen in the home is different than what’s being taught in school.
What we see teachers saying, is that they can teach about budgeting, about making payments on their credit card, about engaging in risky (financial) behavior… but when they (students) go home, that’s not what they see. Everything that we’re teaching is getting crossed-off because parents aren’t exhibiting those same behaviors.
The second one — teachers still don’t feel that there’s a perception of financial education as being something that’s critical for college readiness, or critical life skills.
TCS: Why do you think that is? Why doesn’t our society place importance on financial education?
Schuyler: I think part of it is, when you think about what our parents or grandparents went through with the Great Depression; there was a lot more mindfulness about how people were spending money. And more of that was talked about. Or, at the very least, you saw behaviors that were aimed at trying to save more.
Millennials, right now, tend to be one of the most challenged when it comes to financial understanding. They’re not putting money in their retirement savings — and if they are, only 36% are doing that, but they’re taking money out regularly. They’re viewing it as a savings account, and not something that’s a long-term tool. They’re the ones who are now college educated — they’re using payday loans much more. Using pawn shops much more. Thirty percent have overdrawn checking accounts.
Teachers who are millennials — they do believe it should be taught in schools, because they didn’t have it. They see the behaviors that they’re exhibiting, as well as their peers. They’re the ones who think that, more so than their older colleagues, that this is something that needs to be taught in classrooms.
TCS: Should we start training personal finance teachers? Or should teachers specializing in different subjects all focus on getting this into the curriculum?
Schuyler: I think it’s something you have to learn multiple different times, it needs to be baked into a lot of different classes. When you’re reading A Tale of Two Cities, or you’re talking about The Great Depression in history class, those are opportunities to talk about financial capabilities.
I think the more you hear about it, you realize this is a life skill. Not just a math skill.
TCS: If an individual feels their own personal level of financial literacy is lacking, and they’re engaging in risky financial behaviors, what can they do?
Schuyler: The most important thing is to find somebody to talk to. We find that there are plenty of resources out there online, but depending upon how significant your financial issues are, to be able to sit down and talk to somebody objectively who can look at all the different things, and help you make decisions about what to pay off now, what to focus on…. and really sort out for you the long-term versus the short-term.
So, I think that it’s not only accessing information online, but finding someone you trust to sit down and talk to.