Raise your hand if you’re still using that song you learned to memorize the periodic table. How about that trick to remember how to find the area of a square? Look into a high school classroom and you may find a student begrudgingly circling answers on a test about the inner workings of a vole. He circles “metatarsals” while one, aching question rattles around his mind: “When will I ever need this in my life?”
Now, see a newly married couple standing in front of a house. It’s exactly what they want and it’s even in the right town. It fits their style and it’s in walking distance to shops, bars and her barre class. The area schools are great for the kid on the way. Now what? Do you think they can remember any songs about mortgage applications, down payments or real estate tax escrow options?
The simple answer: no. As a result, many young adults are incapable of making the everyday monetary decisions that define wellbeing and the economy. Teachers, however, are certainly not to blame for our financial shortcomings. Instead, society as a whole has discounted the importance of financial education, which has fueled an epidemic of financial illiteracy across the country. In fact, a FINRA study shows that only fourteen percent of respondents can correctly answer five basic financial literacy questions.
Meanwhile, young people make countless decisions about money, with the weight of each choice enough to sway the trajectory of life and an entire generation. How do we go about buying a house? How much should we borrow for college? How and when do we start filing tax returns? How much should we save, spend and invest? While some American adults can still answer some simple algebra problems, many aren’t armed with fundamental personal finance knowledge. Without that basis, how can they wade through the increasing complexity of long-term financial planning?
When we struggle in school, we look to the parents. I mean, it’s not like we ever built those science class volcanoes on our own or stayed up alone rewriting our college application essay. But while parents frantically help in the competitive race to college, many fail to address basic financial skills, ensuring the next generational loop of poor money choices.