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Nathan's monthly newsletter is designed to help you think, talk and teach about money using the Share Save Spend philosophy. Printing and posting the column in a visible place like the refrigerator door, office or classroom can be a great way to stimulate money conversations with your family and friends.
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| Tick-Tock Goes the Clock: Financial Illiteracy as Status Quo |
When was the last time you added a digit to one of your clocks? A wild guess – never.
In case you missed it, last week we added another digit to the national debt clock. It now stands at $10.2 trillion. Ouch!
If you haven’t noticed, I’ve been on hiatus from my regular musings about money. I should apologize for the absence, but it was for good reason. These past months have been devoted to my next book project – a personal finance textbook for high school students. Suffice it to say, it was no small undertaking.
The goal of the textbook: help young people in their quest for financial sanity and success. Or to be more blunt, help them avoid replicating the financial behavior of us adults these past few decades.
How ironic, as I was sweating out the deadlines and working to help shore-up the financial acumen of the kids, the adults (and that includes the folks who run our financial institutions and our government) were in an economic free-fall. While some might call it the laws of nature, I’m more in the “chickens coming home to roost” camp. I’m not a cynical guy, but come on!
Did we really think our insatiable consumer appetites which morphed into unintelligible financial instruments called derivatives could last? We certainly spent like it wouldn’t end and saved, well, like it wouldn’t end.
And what about the canary in the coal mine – the one that has gone hoarse from the incessant chirping? If we had been paying attention, the answer, or in this case the problem, couldn’t have been more obvious. Year after year I wrote about the impact of our negative savings rate and the piles upon piles of high-interest consumer debt. Even after repeated warnings from a host of financial pundits that disaster was looming it yielded little, if any, behavioral change.
Or to offer a more clinical diagnosis, we were (and in some cases still are) living in an extreme state of denial. Disneyworld is not real – it’s fantasy. So too is the delusional state of hyper-consumption that we’ve been living in these past years. I’m not passing judgment on who is to blame for this unraveling as there is ample to go around. But one thing is abundantly clear, financial illiteracy played a starring role.
As many of you know, I speak to a variety of groups around the country. One of my favorites is college students – especially those in business schools. But as I’ve come to learn, something is decidedly amiss at these institutions of higher learning. Not even the best business schools in America require their students to take a course in personal finance. That’s right, it’s an elective. Excuse me? Since when did personal finance become an elective?
Hopefully by now you understand what we are up against. It’s hard to fathom how an economic superpower like the U.S. can be so short-sighted when it comes to financial literacy. According to the Jump$tart Coalition for Personal Financial Literacy only three states – Utah, Missouri and Tennessee – require high school students to take a semester of personal finance. I wonder how many adults could have avoided the current economic collapse if they had participated in some kind of personal finance training in their formative years.
If you feel strongly about this issue, call and write your federal and state legislators. Tell them it should be mandatory that all students take a personal finance course. That’s the great thing about a democracy – the voice of the people, if persistent, can yield positive change.
Here’s to helping a new generation develop essential financial skills…before another digit is added to the clock.
One Share Save Spend Idea:
Getting on track financially can be a daunting task. But in 20 years of working with families I’ve discovered that charting a new money course is actually very accessible – for both youth and adults. To get started I recommend using our "My Money Plan" exercise. The questions are an essential part of establishing the “why” behind the choices we make with our money – all critical for achieving financial success. Everything we do with money makes a statement about what we value. So it’s important to periodically step back and rebalance our money habits to ensure they are in-line with what we truly value.
Money Talks: One question for teaching about money
If you could change one thing about your current money habits, what would it be?
Gotta Have It Now WOW!
American’s carry $2.56 trillion of consumer debt, up 22% since 2000.
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