Who is Responsible for Teaching Financial Literacy?
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Who is Responsible for Teaching Financial Literacy?
This has been a question that has been weighing on my mind lately. I write and read a lot about personal finances and I wanted to figure out who really is responsible for financial education. I’ve observed a great deal of fear and hesitation when it comes to financial conversations, partly because many of us are just not used to it talking about the subject and partly because many of us aren’t well informed about finances. It’s a scary thought that the latest statistic from CareerBuilder states that around 78% of Americans live paycheck to paycheck. Even those in the higher income bracket are living paycheck to paycheck. How can this be? How do we not know the idea of money management, budgeting, saving and debt? Who is responsible for teaching children and adults these concepts?
Is it the Parents?
I believe it is the parents primary responsibility to teach children about money, after all, it is the parents responsibility to teach basic skills to a child. In the early years, parents have the most influence so it makes sense that even in the toddler years, children are taught about the concept of money. Of course, it is easier said than done. Time and knowledge constraints can play a role in what can be appropriate to be taught. With that many parents may not feel it’s appropriate to talk about money so early on. There is this fear that if we talk about money, we end up raising money-hungry, spoiled kids, but the opposite is true. Kids who grow up into adults without basic money management skills are more likely to go into debt, getting into that cycle of paycheck-to-paycheck and in the end may become a burden to aging parents and young adults just getting their start.
How does a parent know what’s appropriate to teach a child at what age? Talk and observe. Kids basically mirror what you do. What kind of words are you using when you talk about money or bills or expenses? What’s your emotion or language when you are at the store? Talk to your kids about where money comes from, what work is, how bills get paid. The idea is to not protect kids from worrying about money, but to help them understand what money is, how it works and that they can always come to you for any questions they have about it. The alternative is they look up stuff about money online or learn from their friends and end up having a misconstrued idea of what money really is.
Check out this article for 4 Books to Help You Talk to Your Kids About Money.
Is it the School System?
At some point, I do believe a hand-off has to happen with financial education from the parent to the school system. Children will move away from spending time at home to spending more time at school so it makes sense that part of a school’s curriculum should involve age-appropriate financial education. In the similar vein as the parents responsibility, schools and teachers should have the flexibility to adjust what they teach depending on their students needs. When we talk about financial education, we also don’t mean full on budgeting and interest calculations, but basic concepts that teach the idea of money as tool and as a medium of exchange.
NJ (my home state) just recently signed a new law requiring school districts to incorporate “financial literacy instruction” which will include lessons in budgeting, saving, credit, debt, insurance, investment and other issues associated with personal financial responsibility for kindergarten to eight grade. The law will go into effect for the 2019-2020 school year. I’m excited for this to be implemented and for financial education to become part of the normal curriculum. Financial literacy is already being taught at the high school level in NJ thought it varies by district, though I have not heard it be a required class in college. You can check here if your state has a bill awaiting or in place regarding financial literacy.
Is it the Government?
I also believe that the government plays a role in this. The role of the government is to provide and protect it’s citizens and a part of this is providing the necessary tools for citizens to have a successful future. The unfortunate part of this is that the government is heavily influenced by private corporations that make their money exploiting citizens for money (banks/credit card companies, student loans, etc.) It’s unfortunate that the current government shutdown is highlighting the fact that many Americans don’t have enough to make ends meet.
With the government providing the right educational support, perhaps we can also lessen dependence on some of the government assistance programs as it could mean more people will be preparing and saving for that proverbial rainy day.
Is it the Employer?
It used to be that the employer did have a say in the financial well-being of an employee via the pension fund, but not anymore. Today, the responsibility of financial well-being falls squarely on the employee by taking advantage of any available employer sponsored retirement programs. The challenge with this method is that not all employees fully understand why they need it or that they actually have to sign-up and contribute to fund their own accounts. Most programs are not set to default so it requires an opt-in that many people don’t do.
With workers devoting a great amount of their time and energy at work (especially in the 24/7 connected world that we live in), I also feel that a part of financial education and literacy is the responsibility of the employer. It is with hope that any financial literacy at this point in time will already supplement the employee’s existing financial education, but we know sometimes that is not the case, that in many cases, many of the financial topics are new.
Employer’s can also greatly benefit from providing financial wellness to employees. By reducing stress about finances and providing employees with a plan, employees can focus better at work leading to more productivity. Employees who are also benefiting more from their employers may stay longer and thus reduce attrition rates. This can be a win-win for an employer. The question is does an employer want that responsibility?
Is it An Older Sibling or a Mentor?
A part of me also feels that it is also the responsibility of an adult who has had enough experience and know how to also educate the youth. My sister is 13 years younger than me and I am compelled to want to teach her everything I have learned about my own financial journey. (She currently writes about her financial experience while in college on this site). I too realize that sometimes making mistakes can be the best learning experience, but I also know that some of the mistakes I’ve made were very costly and could have been prevented so even if some of the financial concepts don’t click in her mind today, I see them as preventative measures to ensure she also is on a path to financial wellness.
As I write this and reflect, I also believe it’s the partial responsibility of a mentor to also talk about finances. While the mentor/mentee relationship varies, adding this topic can be very helpful in the long-run. While I don’t expect all mentors to want to talk about finances, again as the “adult in the room” with experience do feel that this could be a very valuable talking point to help the mentee advance. Mentors don’t need to have all of the answers, but should be able to direct mentees to other resources to help them on their path.
Is it You?
In the end, as we all age and grow into adults, it is also our sole responsibility to educate ourselves about personal finances. It’s 2019, there’s just no more excuses. Information is easily at our finger tips, learning is no longer confined to a classroom so it behooves all of us to seek information that improves our current situation. From YouTube to CreativeLive to Skillshare to grabbing a book from the library, it’s time that we also take it upon ourselves to be proactive with changing our financial future.
I believe that once you are out of college, the responsibility of securing your financial future now squarely falls on you. The past is the past and while it would be nice to continually say “I wish I had known this,” it’s time to take on a growth mindset and say “I am going to learn and implement this today.”