This post was written by Ohio teacher Brian Page @FinEdChat
The curriculum ladder
As teachers, we are all feeling the squeeze of tough economic times. States have cut education funding for a number of reasons. We are taking the cuts personally because we live a profession that strikes at the core of our values. Every child deserves a fair shot, regardless of the zip code where they were born. Our system should serve as the ladder to provide every child in the country a tool to climb to whatever heights they aspire to reach. Yet we continue to cut away one step after another.
Developing across the country are programs and legislation that prioritize cost-cutting measures rather than put kids first. The world’s most respected educational minds stress the importance of art, music, foreign languages, and gifted instruction opportunities, especially in the elementary grades. Yet these subjects are experiencing deep cuts in all grades, and in some cases disappearing all together. So while we are fighting just to keep every step in the ladder, we are losing sight of the additional steps we need to add to keep pace with the adult demands of modern society. Mastering financial literacy is a necessary step out of poverty for some and into adulthood for everyone.
Did you know…
• We are asking our children to make one of the biggest debt choices of their lives while still in high school, student debt. Student debt has now surpassed credit card debt – – it is $1 trillion. Yet in 46 states kids are unlikely to be introduced to resources like this one and this one to help them make an informed college choice.
• Lots of high school students have jobs and pay taxes, but they don’t know how to fill out basic tax forms or file for themselves. It is time we begin integrating resources like this one so they understand their taxes.
• According to this research, the biggest mistake low-moderate income (LMI) Americans make is they do not have any emergency savings. They do not use any basic banking services such as a direct deposit or a saving account. It baffles me that we do not teach our kids the importance of savings, or the power of compound interest using resources like this one.
• Many high school students are purchasing cars on their own, without any direction or understanding of the total financial obligation. We owe it to them to provide resources like this so they can make informed choices.
• Of those who carry a balance on their credit card from one billing cycle to the next, the average credit debt is $15,418. When our high school students turn 18, they are eligible for a credit card (with a co-signer), and if used wisely, it can be a great tool for them to build their credit score. If used inappropriately, it can ruin their lives. It is time we start to teach kids to understand credit card solicitations and their credit bills using resources like this one.
• A lot of our high school students have trouble figuring out what career field would be a good fit for them. Resources like this one are very helpful, and we owe it to them to expose them to this information.
Each resource makes up the framework for an important step in the education ladder missing in 46 states. Yet the research is clear that there is a direct link between inequality and financial literacy. Equally as clear is a message from our parents. A resounding 93% of parents wish to see financial literacy courses taught in high school.
I want our children first introduced to complicated financial concepts and contracts by teachers who love them and who are trying to help them, not by someone trying to trick them. Relying on the school of hard knocks should not be an option anymore. It is time a step is added in the ladder to empower future generations to make wise and informed financial choices. Personal Finance should be integrated into every child’s K-12 educational experience, and a course in Personal Finance should be a semester-long high school graduation requirement.
Diane Ravitch's blog 
In Missouri, there is a requirement for students to complete a semester of personal finance class to graduate.
Boy, I wish I would have had one since my finances are in shitty shape, oh wait a minute, that wouldn’t have been caused by the banksters and financiers who ruined the economy for us little folk, no way, I was just stupid. Ef them!
i love this post and plan to share it widely at my school and within my teacher-friend-community. thank you!
Actually, I have often thought that our high school students need to take a basic economics/money & banking hybrid course. Exposure to incentives, scarcity, moral hazard, etc. will provide a conceptual framework for personal finance. And it really is not hard to grasp and could be presented in ways interesting and relevant to student’s lives.
“Moral hazard”? You mean like the moral hazard of bailing out banks at public expense and allowing the banks to leave their hand in the public’s pocket? Yes, that is truly hazardous.
And of course you mean *planned* scarcity. Combined with planned glut of cheap foreign crap to undermine local supply.
Actually, I think kids need to understand about choice and what true costs are and no free lunch, etc. I guess I am advocating an “economic way of thinking” thats all.
Moral hazard?
Please elaborate.
Moral hazard is when I take financial risks that you have to pay for if I lose.
Or more broadly that you change your behavior when you have taken steps to reduce the impact of that bad behavior. Here is a Progressive Insurance commercial to illustrate the point: http://m.youtube.com/#/watch?v=opQvy5xsc7s&desktop_uri=%2Fwatch%3Fv%3DopQvy5xsc7s
Thought provoking and insightful.
An Economics course is required for HS graduation in Ga. However, I have no idea how good/bad/complete/incomplete the curriculum is.
If it was like mine, it won’t cover personal finance.
Yes, I checked into it. There is very little personal finance in the curriculum. Mostly free trade is good, things trickle down, endless growth is possible (and necessary), stuff.
Sigh.
When the goal is to get everyone into calculus by 12th grade so that they can become STEM majors in college (and past the state tests on the way there), then personal finance skills are NOT going to be taught.
But yet I recently heard a commentator on a conservative talk radio blaming the public school system for the mortgage meltdown because some of those people claimed they couldn’t understand the contracts.
Funny, given the STEM major shortage myth.
But I do agree that the last thing those who chose to force calculus down the throats of high schoolers is actual knowledge of how the “real world” works.
Here’s the dilemma: the curriculum would probably be developed by the banks because after all, they know how the system works…
My high school (circa late 1980s, mind you) required either economics or personal business to graduate. The “smart” kids took economics which was taught by a dyed-in-the-wool Reaganite supply sided economics believer (truly it was more a religion than a philosophy). We learned to worship Friedman and despise the heretic Keynes. How’s that for “liberal indoctrination” in the public schools? Oh how I wish I’d have taken the personal business class instead.
I’ve been led to believe that most special ed kids at my kid’s high school take a personal finance instead of “regular” economics class and I’m leaning toward trying to get him into that class (he’s on a IEP but is on a general ed track). I really don’t want his head filled with the neo-liberal nonsense they probably teach in the standard class. He’s an awfully credulous young man.
I still remember when he came home from second grade with a worksheet titled “I am a consumer,” with spaces to draw pictures of all the goods and services he consumes. I told him, Well, maybe, you’re a consumer but you are a human being first, a son, a Jew, and a dozen other more important identities than “consumer.”
Then there was the sixth grade worksheet that defined “public good” as “a business run by the government” (!). I keep both these worksheets in a file folder marked “Curriculum to despair of.”
All in all, I think I have good reason to fear the HS economics curriculum. We’re in Ohio, by the way.
I think we need to be careful about financial literacy as it is currently practiced in schools….Like other states, my NJ has an “economic and financial literacy” requirement beginning with the class of 2014….But the question is: WHOSE notion of financial literacy are we teaching? If it’s a financial literacy that doesn’t raise the type of questions about economic/budgetary priorities (i.e. manifestations of our morality) raised here in this post, then it’s useless…If it doesn’t question the inevitability of capitalism, if it uncritically worships entrepreneurialism, it’s useless…If it doesn’t offer historical context for the racial geography of America, it’s useless…If it only says to students: Here’s how supply and demand works, and here’s how to balance a checkbook, it’s useless…If it’s divorced from the notion that people matter and economic decisions are social ones, it’s useless…And, with due respect to the teacher who generated this post, we also need to be careful about our “education (financial or otherwise) as a social uplift out of poverty” model, too….These paradigms tend to encourage people to “rise above” their community and “get out,” rather than value it, stay/come back, and help it…These paradigms reinforce bootstrap individualism, material success as the best kind, and positivist/linear notions of input-output education…I’m not saying the original post meant it that way, just saying we need to be careful and clear….
*Standing and applauding*
Wow,
Excellent post!
My child’s high school does not offer any classes in economics, but he did take the AP exam in microeconomics. It seemed like a reasonable exam over the material and included questions about market failure.
Diane: Excellent advice. I also applaud Iteachforliteracy’s point above. Financial literacy should be taught for the consumer, not the financial industry! I especially like two important points you made:
• We are asking our children to make one of the biggest debt choices of their lives while still in high school, student debt. Student debt has now surpassed credit card debt – – it is $1 trillion. (Comment: I believe parents and the general public really began paying attention when this shocking figure made its appearance some months ago.)
• Of those who carry a balance on their credit card from one billing cycle to the next, the average credit debt is $15,418. When our high school students turn 18, they are eligible for a credit card (with a co-signer), and if used wisely, it can be a great tool for them to build their credit score. If used inappropriately, it can ruin their lives. It is time we start to teach kids to understand credit card solicitations and their credit bills. (Comment: Huge issue. Thanks. Think parents also need to chime in on this as their offspring head off to college.)
I think the financial illiteracy of poor people is often exaggerated. Statements like this are really just tautologies: “The biggest mistake low-moderate income (LMI) Americans make is they do not have any emergency savings.” In other words, the biggest mistake LMI Americans make is…being poor. But that’s what being poor (or even middle-income, esp if you are a minority) means! It means you don’t have savings, period, emergency or otherwise. (And in fact, 40% of Americans have less than $500 in savings http://thinkprogress.org/economy/2012/10/23/1075591/retirement-80-delay/):
“The number of American households living paycheck to paycheck has risen to 38 percent, according to a study by the Consumer Federation of America and the Consumer Planner Board of Standards. Fifteen years ago, the number was 31 percent. The report also found that more than half of Americans are behind on their retirement savings, up from 38 percent in 1997. Both problems have been exacerbated by stagnant wages and an increase in low-wage jobs; as ThinkProgress noted this week, one in four private sector workers make less than $10 an hour.” (http://thinkprogress.org/economy/2012/07/26/589311/study-paycheck-households/)
Two good reads on this:
Click to access behavioral_poverty_aer.pdf
“Standard theorizing about poverty falls into two camps. Social scientists regard the behaviors of the economically disadvantaged either as calculated adaptations to prevailing circumstances or as emanating from a unique “culture of poverty,” rife with deviant values. The first camp presumes that people are highly rational, that they hold coherent and justified beliefs and pursue their goals effectively, without mistakes, and with no need for help. The second camp attributes to the poor a variety of psychological and attitudinal short-fallings that render their views often misguided and their choices fallible, leaving them in need of paternalistic guidance.
We propose a third view. The behavioral patterns of the poor, we argue, may be neither perfectly calculating nor especially deviant. Rather, the poor may exhibit the same basic weaknesses and biases as do people from other walks of life, except that in poverty, with its narrow margins for error, the same behaviors often manifest themselves in more pronounced ways and can lead to worse outcomes.”
http://www.nytimes.com/2013/01/15/science/in-debt-and-digging-deeper-to-find-relief.html (h/t http://mathbabe.org/2013/01/16/quantifying-the-pull-of-poverty-traps/)
“The usual explanations for reckless borrowing focus on people’s character, or social norms that promote free spending and instant gratification. But recent research has shown that scarcity by itself is enough to cause this kind of financial self-sabotage.
“When we put people in situations of scarcity in experiments, they get into poverty traps,” said Eldar Shafir, a professor of psychology and public affairs at Princeton. “They borrow at high interest rates that hurt them, in ways they knew to avoid when there was less scarcity.”
The psychological burden of debt not only saps intellectual resources, it also reinforces the reckless behavior, and quickly, Dr. Shafir and other experts said. Millions of Americans have been keeping the lights on through hard times with borrowed money, running a kind of shell game to keep bill collectors away.”
Would it be feasible to substitute Personal Finance for Algebra?
I remember a comment from a family member about those people with the antenna (this was a while back) on their shack. This comment came from someone who had known about pinching pennies. A TV was a luxury item. The difference was thought that he/she had every hope of doing better with time. The people living in the shack likely had no hope that anything would ever be different. If you had a little extra cash, then you spent it on something that would give you some pleasure because there is never going to be much more. We likely have to be very careful about how we teach financial literacy. Very few people are going to save their way out of poverty.
Spending on formerly “luxury goods” like televisions and cell phones has a lot more to do with the cheapness of electronics these days than with the thriftiness of poor people.
(And frankly, I would argue that having a telephone is not a luxury in 2012 if you want to hold down a job, and cell phones are far cheaper and easier to access than landlines if you have a spotty credit history and a somewhat impermanent address):
“Over the past 50 years, televisions have gotten a lot cheaper and college has gotten a lot more expensive. Consequently, even a low income person can reliably obtain a level of television-based entertainment that would blow the mind of a millionaire from 1961. At the same time, if you’re looking to live in a safe neighborhood with good public schools in a metropolitan area with decent job opportunities you’re going to find that this is quite expensive. Health care has become incredibly expensive. The federal poverty line for a family of three is $18,530 a year.”(http://thinkprogress.org/yglesias/2011/07/19/272511/poverty-is-mostly-about-housing-health-care-and-education/)
What is a luxury depends a great deal on how society structures itself. At one time automobiles were a luxury, so the economy was organized to allow most people to walk to small neighborhood grocery stores. As the automobile became ubiquitous, those small neighborhood stores disappeared from towns like mine, making an automobile a necessity. The Internet is in the process of doing the same thing to a variety of former “luxuries”.
We are in complete agreement. Cell phones (pay as you go) were the usual and only communication tool for most of my students. They did not have landlines because they had to move too frequently. The cell phones was a necessity. Let me know when you find that urban area with decent job opportunities, good schools, and affordable safe neighborhoods.
Why not move to a rural area?
My oldest son lives in a rural area. So rural, in fact, that there is no landline. He could pay for 6-7 telephones from his neighbor’s pole. Right now, he gets in his truck, drives to a high spot, and pulls over. In the middle of the winter, that can get rather uncomfortable pretty quickly. As for jobs, his area would fail miserably. He puts together several occupations to support himself.
I was just curios about why you restricted your search to urban areas in your original post.
I was talking about the experience of my students in response to the posts of hermanados.
Without a doubt, Personal Finance should be integrated into every child’s K-12 educational experience and be a semester-long high school graduation requirement – at minimum! But you have to ask yourself; despite a glut of financial literacy education, why hasn’t the needle moved very much two decades into the Financial Literacy movement?
The answer is not more financial literacy, or more courses on financial functionality. All we are teaching our children is how to be dependent on a system that claims to teach them independence!
What we need to teach them is Financial Life Building skills and that’s what I talk about in this post: http://theamateurconsumer.com/financial-literacy-versus-financial-life-building-skills-part-two/