Financial Education

[glocke12]

With the mortgage mess, and 45% or more of americans using credit cards (and using the equity of their homes as credit cards), to live beyond their means, it really seems as if many americans really have not gotten any kind of financial education of any kind.

Simple things like balancing your check book, what it really means to have a credit card and the costs involved with having, are all things that should probably be taught in the public school systems.

I was in high school in the 80's, and never had any classes that dealt with personal finances. Is that still the case in public schools?

 

[asrmatt]

I think it's a common problem for many countries.
Maybe just more visible in the US because of it's "credit-based" economy...

 

[glocke12]

that chart is pretty scary....

Its also scary that our society is indeed so credit driven....

 

[Stampyhead]

More and more U.S. schools are starting to offer financial education now, in some form or another. In fact, I'm working right now for a large financial institution creating a web based financial education curriculum for middle school and high school students. I think we'll see more and more of it as time goes on. I just wish they'd had it when I was a teen...

 

[jb60606]

When I was there, public schools offered no financial education whatsoever, aside from a class on the stock market (and we were one of only a few Chicago public schools that offered it).

It was taught by a volunteer and only involved the basics of common equity investing, in which you compete with other schools for the best class portfolio.

 

[rhsgolfer33]

Honestly, its not like these people don't know what they're doing. They know its risky to borrow against the equity of your house to buy a boat or whatever. In my mind it really isn't about financial education, its stopping people from living beyond their means. I don't really know how to fix it, but showing a bunch of teenagers that they shouldn't put clothes they don't need and put dinners out on their credit cards if they can't afford to pay it off each month probably isn't going to stop them from doing it. This is really something that needs to be taught by parents through example, not by some monotone economics teacher that probably does the same thing he's telling students not to do.

I'm a college student and I have never payed interest on my credit card and I've never bought anything I couldn't afford at that moment, I've also got a decent amount in my savings and if I was going to continue working for the next two years I'd have an IRA open (I'm the exception I suppose though, as all my friends carry a balance on their credit cards). I didn't learn this at school (although my econ teachers demonstration that a $300 ipod would be like $450-$500 in just a few months if you made minimum payments on your credit card sure didn't hurt the rest of the class), I learned it on my own and through my parents, too bad few parents seem to instill any sense of fiscal responsibility in their children or seem to feel any themselves.

 

[Rodimus Prime]

Honestly, its not like these people don't know what they're doing. They know its risky to borrow against the equity of your house to buy a boat or whatever. In my mind it really isn't about financial education, its stopping people from living beyond their means. I don't really know how to fix it, but showing a bunch of teenagers that they shouldn't put clothes they don't need and put dinners out on their credit cards if they can't afford to pay it off each month probably isn't going to stop them from doing it. This is really something that needs to be taught by parents through example, not by some monotone economics teacher that probably does the same thing he's telling students not to do.

I'm a college student and I have never payed interest on my credit card and I've never bought anything I couldn't afford at that moment, I've also got a decent amount in my savings and if I was going to continue working for the next two years I'd have an IRA open (I'm the exception I suppose though, as all my friends carry a balance on their credit cards). I didn't learn this at school (although my econ teachers demonstration that a $300 ipod would be like $450-$500 in just a few months if you made minimum payments on your credit card sure didn't hurt the rest of the class), I learned it on my own and through my parents, too bad few parents seem to instill any sense of fiscal responsibility in their children or seem to feel any themselves.

true using home equity is risky but if used right it is a great tool. My parents took out a loan against the equity in their house to pay for the first 2 years of my bothers and my college. They also refinanced the house. Even though the loan was larger than the original and their monthly payments where about the same. This was during the record low interested rates of home loans.

Problem is people are using credit to leave beyond there means. There are things in this world taking out a loan is fine. Cars and homes are 2 big ticket items. The big ticket stuff it is fine. it is about living your means

i will admit my monthly credit card bill 1k a month but i pay it all iff every month.

 

[jeremy.king]

too bad few parents seem to instill any sense of fiscal responsibility in their children or seem to feel any themselves.

I've posted in the past about the art of savings - but honestly, I severely underestimated the cost of raising a child. Having our daughter has definitely impacted my fiscal behavior; I have definitely scaled back on luxury items and toy purchases, and focused more on investments and long term growth of my income.

 

[glocke12]

I've posted in the past about the art of savings - but honestly, I severely underestimated the cost of raising a child. Having our daughter has definitely impacted my fiscal behavior; I have definitely scaled back on luxury items and toy purchases, and focused more on investments and long term growth of my income.

Ive done much the same recently. Once your able to separate needs from wants, its amazing how much you can live without, and also how much farther you can make your money go.

 

[maestro55]

You know, I, like most Americans have gotten caught in the same problem. I am a student who decided to move out of my parents house because I was working two part time jobs (equally about 50 hours a week) and figured I could make it on my own. I started with one credit card in December 2006, in October 2007 that number grew to two card when I applied for the Juniper Visa to help pay for my Mac. That number again grew two three when I moved out of my parents house in March of 2008 and decided I needed a credit card to help pay for expenses. This month I not only got another credit card but I now have a car payment. I am going to survive through the summer (my last semester before I get my associates degree) and I will probably eventually get to a point where I can afford to better manage my debt and have less balances on credit cards. And in many ways I regret my spending habits.

So yes, I have been living beyond my means (impromptu trips to Austin and Dallas, buying my iPhone and MacBook, getting a flat screen LCD TV, I have my phone bill, cable bill, and I bought a newer car instead of a cheap used car... though a 2006 Hyundai Accent isn't a fancy car and it is dependable and that is what I needed) but after this summer when I hope (and that is the scary part, because with the job market like it is, hope is all I can do) to be making enough money to pay off these credit cards.

 

[glocke12]

You know, I, like most Americans have gotten caught in the same problem. I am a student who decided to move out of my parents house because I was working two part time jobs (equally about 50 hours a week) and figured I could make it on my own. I started with one credit card in December 2006, in October 2007 that number grew to two card when I applied for the Juniper Visa to help pay for my Mac. That number again grew two three when I moved out of my parents house in March of 2008 and decided I needed a credit card to help pay for expenses. This month I not only got another credit card but I now have a car payment. I am going to survive through the summer (my last semester before I get my associates degree) and I will probably eventually get to a point where I can afford to better manage my debt and have less balances on credit cards. And in many ways I regret my spending habits.

So yes, I have been living beyond my means (impromptu trips to Austin and Dallas, buying my iPhone and MacBook, getting a flat screen LCD TV, I have my phone bill, cable bill, and I bought a newer car instead of a cheap used car... though a 2006 Hyundai Accent isn't a fancy car and it is dependable and that is what I needed) but after this summer when I hope (and that is the scary part, because with the job market like it is, hope is all I can do) to be making enough money to pay off these credit cards.

Some advice, stop using the cards now and do what you have to in order to get them paid off. I started out the same way, a credit card to help with expenses, than I wanted this, wanted that, this bill needs to be paid, than I got another card, and the cycle repeated itself ... it took a very long time (over 12 years) for me to get them all paid off.