Money Sense

Remember receiving partial credit for some wrong answers in math because of a silly calculation error on one of several steps? If you were to ask me to explain the financial crisis that boiled over two weeks ago, I’d probably receive partial credit.  

I’m well educated and I read the Economist and the Wall Street Journal regularly, so if my knowledge is incomplete, I wonder how well the “average” person on the street understands it. Admittedly, it can get fairly abstract with references to “hot money,” “packaged securities,” and “commercial paper markets.”  

I would not be surprised if you understand it better than me, but could you explain it to my 13 and 16 year olds well enough that they could in turn explain it to their friends? The clearer it is made, the better the chances of truly fixing it and holding the people responsible for it accountable. 

Seems to me that 98% of television commentators reporting on the crisis assume listeners are far more financially savvy than they most likely are. Paul Solman of the NewsHour is the exception to the rule and I propose an annual Paul Solman award for excellence in economic reporting.

As a result of this fiasco, we’ll probably hear even more calls for K-12 public schools to teach financial literacy.

I guess I’d support that with three conditions.

First, don’t try to squeeze it into the existing curriculum. Recognize the limits of time and explain what can be eliminated and why so that there’s adequate time for the new financial literacy content. Ted Sizer refers to this process as the “politics of subtraction” which is another way of saying some groups will inevitably be upset with whatever is eliminated.

Second, openly acknowledge the normative nature of financial literacy teaching and learning. Put differently, one’s values shape one’s financial decision making. More specifically, budgets are based on priorities and priorities are based on values. Different values, different priorities, different budgetary decisions. Some of the strongest advocates of financial literacy curricula are conservatives who often bristle at value-laden teaching whether it takes the form of character education, sex education, or social justice-related teaching and learning. 

Third, don’t expect increased knowledge to automatically lead to changed behavior. This is the most important point because this is the overarching premise of the financial literacy adherents. They assume if young people know more about personal finance, they’ll manage their money more responsibly.

I don’t believe that because children and adolescents learn far more about personal finance by watching the adults around them manage or mismanage their finances. 

You can’t design a school curriculum that instills the kind of discipline I developed watching my dad work extremely hard, spend cautiously, and save diligently. 

I could study a stack of finance texts closely enough to pass any broker exam, but absent my dad’s daily example during my formative years, I’d still be unprepared for adult financial responsibilities.

1 thought on “Money Sense

  1. Hi Ron,
    I partially agree with you about developing finance sense in child by employing a school curriculum. You are absolutely right in your second last paragraph. But again, I think if a good session or course structure (enriched with good and bad case studies & examples) can be produced in front of kids, they may understand the importance of proper money management.

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