Financial Literacy the Hard Way
Learning From Others’ Mistakes and Near-Misses
As I finished up her order, a long-time customer asked how my daughter was. I very proudly shared that my little one was very pleased with herself, because she had just purchased a coveted toy that she had saved $50 for.
“I wish my mother would have taught me about money when I was a child. I had to learn a lot of things the hard way as an adult.”
My customer’s wistful tone surprised me. She was usually very self-assured, so admitting having to learn something the hard way was unusual for her. At the same time, it made me feel very good about myself as a parent.
My daughter is interested in learning how to manage her money because it is what she calls a “Useful Life Skill”. I was interested in teaching her because statistically, it appears that each successive generation is less financially literate than the one before… and this may be unfortunately tied to school curriculum.
So far in her public school education, my daughter has learned some basic mathematical information about money. She knows the value of different coins and bills, but information about budgeting has been limited to word problems about a fictitious character who has x amount of money, and figuring out how much popcorn/ice cream/pizza that character can buy.
This might explain why some of the younger people at work always seem to be broke even though our employer pays reasonably well for our area. I see them walking in with fancy coffees every morning and either going out for lunch or having something delivered every day. I hear them talking about the shows they have been watching on various subscription services… and grumbling about college debt.
Student loan debt is very much in the news these days – and it isn’t hard to see why. According to the Education Data Initiative, 43.6 million people have student loan debt, and the average amount they owe is $40,505. I imagine that, had they been given a better financial literacy foundation, many of those who owe large sums for their college education may have made some different choices.
I know when I was getting ready to go to college, my high school had an information night to help parents fill out the FAFSA form. It was easy to find out how to borrow money.
Information about making good choices when borrowing that money? Not so much. Is the borrower studying a field that is worth the investment? Is college even the right choice for that person?
As a parent, it’s important to have an honest discussion with your child about options for their future. If college really isn’t a good fit, don’t pressure them to go. A trade school or the military may be a better choice. Encourage them to do their homework – what sorts of educational requirements, if any, are there for their chosen field… how likely are they to actually find work in that field… how well does that work typically pay?
My high school was one of the few in the area that offered a welding program. I had a friend who participated in this program and absolutely loved it. College really wasn’t a good fit for him, but he was pressured to go anyway when he graduated.
After borrowing thousands of dollars, he dropped out after a year and found a very lucrative job as a welder. This was frustrating for him, because he hadn’t needed to go to college, and had wasted thousands of dollars and a whole year.
I was very, very lucky as I was getting ready to graduate from college. I had been considering graduate school, and floated the idea past my academic advisor. She pointed out very frankly that our field was not about what you know, but who you know, and encouraged me to try to find a job instead.
“If you can’t find a job or internship after a year, then consider graduate school,” she said.
Her advice saved me thousands of dollars and I haven’t looked back. Within a month of graduating, I had a job in my degree field. Years later, I have subordinates who did not have academic advisors like mine. They owe tens of thousands of dollars for their masters degrees… and earn less than I do.
It isn’t just the younger generation who seem to have these problems, either. The customer who wished she had learned how to manage money as a child reached adulthood in the 1950s. That customer isn’t alone for her generation – some TV stations seem to constantly be running ads for services to help older adults make good financial choices. These cover a variety of areas, including having enough money to retire, choosing the best medicare plan, covering funeral expenses, or buying life insurance.
Financial insecurity seems to be the main fear these ads play into – fear of running out of money during retirement, fear of leaving one’s family with unmanageable expenses.
The idea of waiting to learn to make responsible financial choices until one is getting ready to retire is horrifying… but according to annuity.org, 60% of non-retirees in 2021 felt their retirement savings weren’t on track. It doesn’t hurt to encourage your child to start saving for retirement now.
Luckily, there are plenty of resources out there for parents like me who work full-time but want to supplement their children’s education. Today’s programs are fun and engaging and well worth their subscription fees. I don’t have to tell my daughter to log into her financial literacy program, she eagerly does it on her own when she comes home from school.
My hope for my child – and yours – is that they learn to make good financial choices now. They won’t grow up burdened with needless debt, they’ll know how to spend money responsibly, and they will not have regrets later in life about not learning financial literacy.