A friend of mine remarked a couple of years ago that he
marveled at the ability of the U.S.
economy every June to absorb hundreds of thousands of new jobseekers thrust
into the workforce when they graduate high school or college. “Where do all those jobs come from?” he
wondered.
We’re in the middle of graduation season again, and when I
think of all the young adults seeking employment, that is not the only question
that comes to mind. I wonder how
prepared they are to handle money.
The only formal education on personal finance that I had at all from first grade through
undergraduate college was a short segment in social studies sometime in
elementary school where we learned how to write a check from some little
booklets that, as I recall, were furnished by a local bank.
A review of graduation requirements at colleges of the Big
Ten conference, including powerhouses like Ohio
State University
and Northwestern University, found that only one mandated
a course on personal finance. All
fourteen (yes, fourteen institutions in the Big Ten—I don’t guess math is
taught, either) require some kind of diversity class to obtain a diploma.
But if passing a financial literacy course were universally
required of college graduates, who should teach the course? Business department faculty? Math professors? Social science teachers? How about psychology staff, or even religion
faculty? I believe each could bring a
necessary perspective to the subject, but in the end I think they would be less
effective than the student’s parents and real-world experience.
Financial competence is about more than mastering some basic
knowledge and following some rules. The
genius of being human is to learn from experience and the ability to consider
context and bend, or even break, a rule depending on the circumstances. One author used the example of the generally
accepted wisdom to save three to six months’ worth of income as a safety
net. She did not follow that rule upon
graduating from college because she had high student loan debt and wanted to
pay it off to save on interest charges.
Her safety net was moving back in with her parents, if necessary.
Money inevitably comes with emotional baggage. Whether our childhood household struggled to
have enough money to pay the monthly bills or was always flush with cash to
procure any want, that experience will shape our attitude toward money and
probably eventually be a source of conflict with a spouse or other important
people in our lives. Money may come to
represent power or embarrassment, freedom or subservience, a blessing or a
curse.
We may enforce a level of financial literacy on students,
but the key to their success handling money will be to know themselves, to have
self-awareness of what money represents to them and of their unique
circumstances that will dictate how to apply, or even whether to apply, the
rules.
Parents can start their children on the road to financial
literacy by including them in age-appropriate decision-making for the family
finances. Whether it be by having a
voice in choosing among several destinations for a family vacation or assisting
with the grocery shopping, the child can learn from someone most acquainted
with their personality and background, someone who can teach real-time in
real-life situations and can model the right behavior. In my own case, I think I learned more from
my parents’ occasional bad money-related decisions—bad outcomes are powerful
lessons—and their husband-wife give-and-take in approaching financial
decision-making.
Include the kids, parents.
They will learn responsibility and a right perspective on money and not
even realize it until years later, when they are miles ahead of those who were
not so fortunate to have such good teachers.
Until next time,
Roger
“Start children off
on the way they should go, and even when they are old they will not turn from
it.” Proverbs 22:6 NIV®*
*Scripture quotations taken from the Holy Bible, New
International Version® NIV®
Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™
Used by permission.
All rights reserved worldwide.
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