Nan J. Morrison
President and CEO, Council for Economic Education
Our education system covers the gamut of subjects, but often not personal finance. What can you do to take your financial education into your own hands?
How did you learn about money?
The answer far too often is “by mistake” – and sometimes a very costly one. The majority of America’s young men and women learn personal finance by trial and error.
What we teach kids about money
We spend billions of dollars in the United States helping children master reading, writing, and arithmetic, and then we send them into the world lacking the basic personal finance skills they’ll need to prosper. Fewer than half of the states require that financial literacy courses be offered in high schools, according to the Council for Economic Education’s 2018 Survey of the States; and only a third require students to actually take the course.
Recent surveys show that only about half of Americans grasp the basic concepts behind managing debt, saving for retirement, and insuring against major risks. Unfortunately, though, personal finance is an area where practice does not make perfect, and we need to more than grasp the basics to become financially secure.
The personal finance need-to-know
So, what are the top things young people should know about personal finance?
- Reality is key: Set realistic financial goals based on life goals (such as travel, charity, saving for education, home, retirement, etc.), and then set a realistic budget from there.
- There are necessary trade-offs: Financial decisions almost always involve trade-offs, so it’s important to learn to consider costs and benefits before you act.
- Your finances aren’t everyone’s finances: Recognize that informed financial choices that fit you may not be right for others; your personal situation and preferences matter.
- Be cautious with credit: Know that credit is a loan you are going to have to pay back. Used wisely, credit can be your best friend; used carelessly it can be your worst enemy.
The time is now
It’s never too late to learn about managing money. It’s also never too early to start. What can you do now to take control of your personal finance?
- Put in time before money: Invest some time to learn principles, priorities and possibilities before you invest your hard-earned dollars.
- Take advantage of course offerings: If your school or your kids’ school offers personal finance courses, sign up like it’s found money. It is.
- Push for better resources: If your school does not teach personal finance, urge them or state leaders to get with the program and provide necessary resources for students to be financially successful after graduation.
- Turn to your community: If you are out of school, look for classes in your community — at a community center, house of worship, local bank, adult ed program, or other locations.
The bottom line: don’t learn about money and personal finance the hard way – by mistake. Take action now to learn the basics, so you don’t lose money along the way.