As a teenager I remember sitting in an economics class in high school and learning about the stock market as well as the value of gold. I remember my teacher bringing in a small one ounce gold bar that he had purchased and I believe at that time it was worth a few hundred dollars. He was very excited about how much that ounce of gold would increase in value in the years to come. As of April 12th that one ounce gold bar is valued at $1,534.90.
(I wrote this post and then saw this interesting bit of news online: Gold Investors Exit Amid Price Collapse)
In an effort to teach us about the stock market he had us a do a semester long project where we each went through the newspapers (no Internet back then) and chose 5 different stocks (hypothetically) to purchase.
Before we chose our stocks we discussed things such as:
- the key characteristics to look for when considering different companies
- our risk tolerance
- the difference between a bull market and a bear market
- and portfolio diversification
We were given time to research each company that we wanted to purchase stocks in, as well as ask our families for suggestions. Once we purchased our stocks it was our job to track their value every morning, which included the variation in price from day to day, for the rest of the semester. It was somewhat of a competition to see who in the class would earn the most by the last day.
What I liked about this project was that we were given a chance to practice what we were studying. The concept of investing was made fun, which in turn made it much more interesting than simply reading a text book about the concepts of investing and then writing an exam on it.
Financial Literacy Needs to Be Taught in High Schools
Why did I decide to talk about teaching financial literacy in high school and the things I learned in my economics classes?
Because, although this one class opened our eyes to the possibility of investing our money in the stock market in the hopes of receiving a nice return on our investment, it wasn’t enough to prepare us for all of the different financial aspects that adults need to know to be financially successful.
Throughout the 4 years that I attended high school I think there were many times when financial literacy could easily have been incorporated into the curriculum that the teachers were teaching, but it wasn’t.
Home Economics Class
For example, in home economics, instead of just teaching us how to cook, the teachers could have taught us how to meal plan, how to buy groceries, how to shop for good deals, how to create a grocery budget and stick with it, etc.
Instead of teaching us how to sew a stupid stuffed monkey they could have talked about how much money a person could save by learning how to make their own clothes, as well as home accessories such as pillow cases, curtains, duvets, and so on.
They also could have grouped us into pairs and used practical projects to teach us about finding our own place to live and how much that would cost. As well as how much it would cost to get married and have children one day.
In our accounting class they could have taken some time to teach us about personal budgets, banking – including writing cheques, and balancing cheque books.
I remember my first roommate in college didn’t even know what a “rubber cheque” was, because of course she was never taught that.
One of the many things that I really wish they would have taught us in high school was that interest rates on savings accounts and other investments can fluctuate quite a bit and that the 22% interest rate we were experiencing at that time was unusual, and that it most likely wouldn’t stay like that. Heck, for the past 10 years interest rates have been sitting between zero and two percent.
Why do I focus on that point so much? Because during my years in high school I was earning a lot of money on my savings account, with rates like that, and it led me to believe that I always would. I know how crazy that sounds, but as a teenager, with limited financial knowledge, it was all I knew. I was never told that it could/would change one day. Kinda like my roommate not knowing what a rubber cheque was, and that was even after she wrote a couple of them.
I have no idea how the curriculum for high schools is chosen. I wouldn’t be surprised if many schools are still using the same old text books that we were using so many years ago.
When many of us are young we are encouraged to attend high school and college to get an education that will hopefully help us find a nice job and make a nice income.
But what about teaching students financial literacy that we can apply to our personal lives so that we don’t spend more than we make.
Why not teach us how to save money first, and then buy a new car, or a house? Talk about how important it is to save up for a vacation instead of putting a vacation on a credit card and paying it off for the next 3 years.
Many times I’ve said that some people are born to be spenders and some are born to be thrifty.
For those of us that are born to be spenders, education around personal finance is even more important.
Yes, it is great for all of us to learn the skills that we need to find a good job. However, if all we ever do is spend every dollar we earn, and then some, how have we really benefited from our education?
There is an on-going argument around the fact that parents need to teach their children about money. But what if the parents do not have the skills, time or knowledge to do that? They rely on the schools to teach those skills. And the schools rely on the parents to teach those skills. And that is where most people miss out.
If you take a look at pretty much anywhere in this world it is pretty obvious, that for many people, financial literacy wasn’t taught at school or at home. But it should have been!