Why Personal Finance is not taught in Schools in the US

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Dick D
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Location: Connecticut

Re: Why Personal Finance is not taught in Schools in the US

Post by Dick D » Thu Jul 18, 2019 12:49 pm

I do not think personal finance should be taught in school. Perhaps it could be covered by teaching Critical Thinking. Where I have seen personal finance introduced it has been at the expense of other subjects that in my opinion are more fundamental to our democracy. Just think about the absurdity of thinking we need to teach people to spend less than they make and not purchase items that they cannot afford especially if they have a college education. Did they learn how to Think??

MathWizard
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Re: Why Personal Finance is not taught in Schools in the US

Post by MathWizard » Thu Jul 18, 2019 12:51 pm

What really needs to be learned is deferred gratification. That typically is taught and demonstrated
at home. I saw how being poor sucked when I was a kid, and vowed to make sure that my family would
not be poor.

I talked about finances with my kids opportunistically. I pointed out that there are advantages to
have more money. (Not hate the rich, but to recognise why such things happen naturally.)

They saved some money from odd jobs, and I allowed them to deposit in the Bank of Mom and Dad
(no loans, just savings accounts). I showed them the difference between the savings account rates (0.10%)
that they could get with their $100 and the 3.25% I could get in a $5,000 CD. This was because it cost them
the same to do a $100 transaction as it did a $5000 transaction, so they could afford to pay more in interest.

I did explain that I was tying up money for a while, and would have to pay a penalty to get at the money before
the CD matured, and I earned more interest for that. I showed them this while standing in line and
looking at the savings interest and the CD rates for different amounts and for different lengths to maturity.

The kids are doing well with money after college.

dbr
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Re: Why Personal Finance is not taught in Schools in the US

Post by dbr » Thu Jul 18, 2019 12:53 pm

Abe wrote:
Thu Jul 18, 2019 12:24 pm
willthrill81 wrote:
Thu Jul 18, 2019 12:12 pm
dbr wrote:
Thu Jul 18, 2019 12:08 pm
Yellowhouse wrote:
Thu Jul 18, 2019 11:25 am
Why they choose to teach students Algebra and Geometry over Personal Finance is a huge question mark. 100% of students MUST be knowledgeable in personal finance, while an extremely small % will ever be forced to know Algebra or Geometry in their daily lives!!
Algebra is needed to understand concepts of return, compounding, etc., etc. in personal finance.
You can understand those concepts with just a good understanding of multiplication and perhaps exponents. In an MBA finance course, we never did any algebra at all and relied instead on business calculators, specifically the BAII-Plus.
All one has to do to understand compounding is pick a number and multiply it by 1.10 (assuming 10% interest). After about 7 times, your number doubles. That's compounding. Of course it's a lot faster with a financial calculator. I highly recommend the Texas Instrument BAll-Plus.
And right there is a good illustration of a concept in algebra, and possibly also of a concept in analysis, namely a sequence and the concept of a function whose domain is the natural numbers. It is just that it is not recognized for what it is and when you use a calculator to do it you hide the possibility of writing it in symbols. That is also why calculator use should be delayed as long as possible.

Here is an example of abstract algebra in elementary school:

Definition of a ring:

A ring is a set R equipped with two binary operations[1] + and · satisfying the following three sets of axioms, called the ring axioms[2][3][4]

R is an abelian group under addition, meaning that:
(a + b) + c = a + (b + c) for all a, b, c in R (that is, + is associative).
a + b = b + a for all a, b in R (that is, + is commutative).
There is an element 0 in R such that a + 0 = a for all a in R (that is, 0 is the additive identity).
For each a in R there exists −a in R such that a + (−a) = 0 (that is, −a is the additive inverse of a).
R is a monoid under multiplication, meaning that:
(a · b) · c = a · (b · c) for all a, b, c in R (that is, · is associative).
There is an element 1 in R such that a · 1 = a and 1 · a = a for all a in R (that is, 1 is the multiplicative identity).[5]
Multiplication is distributive with respect to addition, meaning that:
a ⋅ (b + c) = (a · b) + (a · c) for all a, b, c in R (left distributivity).
(b + c) · a = (b · a) + (c · a) for all a, b, c in R (right distributivity).

In Kindergarten we learn to count which gets us the set of positive integers. Children also learn that two integers can be added to get an integer, so the set is closed under addition. In first, maybe second grade, they learn that two integers can be multiplied so the set is closed under multiplication. They also learn that addition and multiplication are commutative. By fourth grade they know the associative property for both addition and multiplication. In Kindergarten they already know that adding zero gets the same number back so they see the identity element for addition. As soon as they learn to multiply in first grade they see that 1 is the identity element for multiplication. Probably in second grade they learn about negative numbers and that the negative of a positive number is its inverse, though that property may not be stressed. By fourth grade the distributive law is taught.

When fractions are introduced by fourth grade it is possible to introduce the multiplicative inverse and recognize the set of fractions as an algebraic field.

It is probably a first course in abstract algebra for math majors in college that these ideas are taught explicitly and formally, but early elementary students are already working with a model of these ideas that already contains the elements of the definition.

texasdiver
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Re: Why Personal Finance is not taught in Schools in the US

Post by texasdiver » Thu Jul 18, 2019 12:57 pm

High School teacher here.

Personal Finance is offered at the schools where I have taught, but is no longer a required class. Couple things to keep in mind

1. In most states (if not all states) graduation requirements are set at the state level. The State Departments of Education determine how many years of each core subject (Math, Science, English/Language Arts, Social Studies) are required for graduation as well as how many ancillary or elective credits are required (languages, health/PE, arts/music, career/technology etc.

2. Individual schools can usually offer a wide range of business and finance electives but do not generally have discretion to impose required classes on students that are not required at the state level. So schools can offer it but can't require it if the state doesn't already do so.

3. A variety of personal finance classes are available at the school where I currently teach. There is a class called "Financial Fitness" in the Math Department. It's basically an applied remedial math class for students struggling in regular math classes. There is a class called "Financial Services" in the Career and Technology Department. Students work in the on-campus branch of the local teacher's credit union and learn about bank management and some general personal finance stuff as well. There are also classes like AP microeconomics and AP macroeconomics. And a bunch of business and marketing related classes.

What there is not is a universal requirement that all students take a basic personal finance class. And if they were to impose such a requirement there would be tremendous pushback from a lot of parents because it would mean that Johnny who wants to be a computer engineer would have to drop one of his advanced coding classes to meet this requirement and Suzie who wants to be a doctor would have to drop her dual enrollment in AP Biology and AP Chemistry to take this class. And so on and so forth. There are only so many class periods in a day and every requirement you impose on students means one less other class they are able to take.

ohai
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Re: Why Personal Finance is not taught in Schools in the US

Post by ohai » Thu Jul 18, 2019 12:58 pm

There should definitely be a personal finance curriculum in schools - maybe not by itself, but as part as a "life skills package" - including topics like basic carpentry, sewing, cooking, and so on. I didn't go to school in the US. So maybe this exists here, maybe it doesn't. I don't know.

The fact that most kids will not learn the material should not discourage the class itself. Most people end up being bad at math or grammar too. However, we still have to teach these things for the benefit of the students who will learn.

coachd50
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Re: Why Personal Finance is not taught in Schools in the US

Post by coachd50 » Thu Jul 18, 2019 12:59 pm

texasdiver wrote:
Thu Jul 18, 2019 12:57 pm
High School teacher here.

Personal Finance is offered at the schools where I have taught, but is no longer a required class. Couple things to keep in mind

1. In most states (if not all states) graduation requirements are set at the state level. The State Departments of Education determine how many years of each core subject (Math, Science, English/Language Arts, Social Studies) are required for graduation as well as how many ancillary or elective credits are required (languages, health/PE, arts/music, career/technology etc.

2. Individual schools can usually offer a wide range of business and finance electives but do not generally have discretion to impose required classes on students that are not required at the state level. So schools can offer it but can't require it if the state doesn't already do so.

3. A variety of personal finance classes are available at the school where I currently teach. There is a class called "Financial Fitness" in the Math Department. It's basically an applied remedial math class for students struggling in regular math classes. There is a class called "Financial Services" in the Career and Technology Department. Students work in the on-campus branch of the local teacher's credit union and learn about bank management and some general personal finance stuff as well. There are also classes like AP microeconomics and AP macroeconomics. And a bunch of business and marketing related classes.

What there is not is a universal requirement that all students take a basic personal finance class. And if they were to impose such a requirement there would be tremendous pushback from a lot of parents because it would mean that Johnny who wants to be a computer engineer would have to drop one of his advanced coding classes to meet this requirement and Suzie who wants to be a doctor would have to drop her dual enrollment in AP Biology and AP Chemistry to take this class. And so on and so forth. There are only so many class periods in a day and every requirement you impose on students means one less other class they are able to take.
Plus , who would be writing that curriculum? Members of the financial services industry lobby no doubt.

texasdiver
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Re: Why Personal Finance is not taught in Schools in the US

Post by texasdiver » Thu Jul 18, 2019 1:07 pm

coachd50 wrote:
Thu Jul 18, 2019 12:59 pm
texasdiver wrote:
Thu Jul 18, 2019 12:57 pm
High School teacher here.

Personal Finance is offered at the schools where I have taught, but is no longer a required class. Couple things to keep in mind

1. In most states (if not all states) graduation requirements are set at the state level. The State Departments of Education determine how many years of each core subject (Math, Science, English/Language Arts, Social Studies) are required for graduation as well as how many ancillary or elective credits are required (languages, health/PE, arts/music, career/technology etc.

2. Individual schools can usually offer a wide range of business and finance electives but do not generally have discretion to impose required classes on students that are not required at the state level. So schools can offer it but can't require it if the state doesn't already do so.

3. A variety of personal finance classes are available at the school where I currently teach. There is a class called "Financial Fitness" in the Math Department. It's basically an applied remedial math class for students struggling in regular math classes. There is a class called "Financial Services" in the Career and Technology Department. Students work in the on-campus branch of the local teacher's credit union and learn about bank management and some general personal finance stuff as well. There are also classes like AP microeconomics and AP macroeconomics. And a bunch of business and marketing related classes.

What there is not is a universal requirement that all students take a basic personal finance class. And if they were to impose such a requirement there would be tremendous pushback from a lot of parents because it would mean that Johnny who wants to be a computer engineer would have to drop one of his advanced coding classes to meet this requirement and Suzie who wants to be a doctor would have to drop her dual enrollment in AP Biology and AP Chemistry to take this class. And so on and so forth. There are only so many class periods in a day and every requirement you impose on students means one less other class they are able to take.
Plus , who would be writing that curriculum? Members of the financial services industry lobby no doubt.
I subbed for a Personal Finance class last year. They were learning how to balance their checkbook and doing checkbook ledger exercises on old worksheets. Which I thought was somewhat ridiculous as these days pretty much no one under 40 uses a checkbook on any kind of regular basis and they track their account balances using the bank's phone app rather than a checkbook ledger. But I guess the basic concept was OK to learn. Money comes in and money goes out and you need to keep track.

In most elective classes, curriculum is generally up to the teacher provided that the basic state requirements are met (if there are any). Schools rarely buy textbooks for elective classes anymore. Especially when most students either have school issued chromebooks or iPads. That isn't to say that the financial services industry isn't creating and providing curriculum. I wouldn't be surprised if they are and that there are industry-sponsored web sites out there with "educational" lessons and downloads created for teachers to use.

coachd50
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Re: Why Personal Finance is not taught in Schools in the US

Post by coachd50 » Thu Jul 18, 2019 1:12 pm

texasdiver wrote:
Thu Jul 18, 2019 1:07 pm
coachd50 wrote:
Thu Jul 18, 2019 12:59 pm
texasdiver wrote:
Thu Jul 18, 2019 12:57 pm
High School teacher here.

Personal Finance is offered at the schools where I have taught, but is no longer a required class. Couple things to keep in mind

1. In most states (if not all states) graduation requirements are set at the state level. The State Departments of Education determine how many years of each core subject (Math, Science, English/Language Arts, Social Studies) are required for graduation as well as how many ancillary or elective credits are required (languages, health/PE, arts/music, career/technology etc.

2. Individual schools can usually offer a wide range of business and finance electives but do not generally have discretion to impose required classes on students that are not required at the state level. So schools can offer it but can't require it if the state doesn't already do so.

3. A variety of personal finance classes are available at the school where I currently teach. There is a class called "Financial Fitness" in the Math Department. It's basically an applied remedial math class for students struggling in regular math classes. There is a class called "Financial Services" in the Career and Technology Department. Students work in the on-campus branch of the local teacher's credit union and learn about bank management and some general personal finance stuff as well. There are also classes like AP microeconomics and AP macroeconomics. And a bunch of business and marketing related classes.

What there is not is a universal requirement that all students take a basic personal finance class. And if they were to impose such a requirement there would be tremendous pushback from a lot of parents because it would mean that Johnny who wants to be a computer engineer would have to drop one of his advanced coding classes to meet this requirement and Suzie who wants to be a doctor would have to drop her dual enrollment in AP Biology and AP Chemistry to take this class. And so on and so forth. There are only so many class periods in a day and every requirement you impose on students means one less other class they are able to take.
Plus , who would be writing that curriculum? Members of the financial services industry lobby no doubt.
I subbed for a Personal Finance class last year. They were learning how to balance their checkbook and doing checkbook ledger exercises on old worksheets. Which I thought was somewhat ridiculous as these days pretty much no one under 40 uses a checkbook on any kind of regular basis and they track their account balances using the bank's phone app rather than a checkbook ledger. But I guess the basic concept was OK to learn. Money comes in and money goes out and you need to keep track.

In most elective classes, curriculum is generally up to the teacher provided that the basic state requirements are met (if there are any). Schools rarely buy textbooks for elective classes anymore. Especially when most students either have school issued chromebooks or iPads. That isn't to say that the financial services industry isn't creating and providing curriculum. I wouldn't be surprised if they are and that there are industry-sponsored web sites out there with "educational" lessons and downloads created for teachers to use.
Elementary school teacher here (but not core content--see the screen name :) ) and I have witnessed similar. Old check book registers etc. Also most of the financial education I have seen is more basica econ stuff, needs vs wants, producers and consumers etc. That is the curriculum at the lower level.

I just am a bit skeptical about higher levels, given my belief about lobbyists and the curriculum. Particularly since the financial services industry tend to make a decent amount of profit from those not making the "best" personal finance decisions.

bluebolt
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Re: Why Personal Finance is not taught in Schools in the US

Post by bluebolt » Thu Jul 18, 2019 1:20 pm

Personal finance in 5 seconds:

Live below your means. The rest is commentary.

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Misenplace
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Re: Why Personal Finance is not taught in Schools in the US

Post by Misenplace » Thu Jul 18, 2019 1:27 pm

This thread has run its course and is locked (not personal nor actionable). General comment threads are off topic in the forums with "Personal" in the title. See: A reminder that non-investing general comment threads are OT

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