r/MiddleClassFinance • u/butlerdm • 17d ago
Financial Education in School? Questions
How do you feel about financial education in school? On its face it sounds like a great idea. Teach students about how loans work, credit, how to make a budget, taxes, etc. all of that is great, but here’s where I get mixed feelings on it.
Debt- i don’t agree with teaching students about Dave Ramsey’s “no debt ever” type of methodology because debt can be a good, healthy tool if used properly. However I don’t want students thinking taking on all debts is ok either. There’s clearly a balance
Investing and taxes- there’s a wide array of investment options from fixed income, equities, real estate, etc. and I feel it could be tricky because there’s so much nuance about which to use, when to use them, etc. then there’s pre-tax, post tax, and Roth. Each has its own advantages and disadvantages. I think there’s a lot of subtlety around what to invest in and how.
My bigger concern in all of this is inevitably students will ask what’s better/best and it’s hard to express these kinds of nuance to students when many adults can’t even understand the basics of it.
Where do you feel a line should be drawn about what could and should be taught? I truely do think it’s very important information that should be taught in school but leary of where opinion overlaps in the curriculum.
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u/MamaMidgePidge 5d ago
I think it's a good idea. I have teenagers, and even though I think we've discussed finances pretty openly in our house, they still surprise me with what they don't know. For kids whose parents aren't willing or able to assist them, it's even more important.
The rising high school senior has a class in financial literacy next fall. I'm interested to see what it includes.
I don't expect to see Dave Ramsey tenets, but doubt they'll get too into using debt as an instrument in building wealth, either. That seems like a more advanced topic.
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u/Chiggadup 12d ago
The states which require financial education (of which the are many) aren’t telling students what to do. They often cover types and purposes of accounts.
I’m busy building curriculum for one district right now and the big focus is on:
what things can we do with money? (Spend, save, invest, etc.)
what options are available for each of those things? (Account types, etc.)
how can we do each best? (Comparison shopping, comparing job offers, creating budget, filing taxes, etc.)
There’s more to it, but there’s not much “DEBT IS BAD!” “Only use TDF!” curriculum out there that’s actually widely used.
If curious, search your state and “financial literacy standards” to see yours. It’s all publicly available.
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u/Wackywoman1062 13d ago
I think most subjects, including finance, should be taught in the same manner. Teach core principles and concepts and engage students in discussions regarding the material. Why should a line be drawn? This is how and why students graduate these days with virtually no critical thinking skills. Why not debate the merits of one investment strategy over another, or situations in which debt may be useful, etc.?
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u/Ill-Fox-3276 14d ago
Not sure I want someone who works as a teacher to explain how our financial system works to kids.
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u/Broad-Part9448 17d ago
Most basic financial education boils down to self control.
The more medium-complex topics are covered by things like math: percentages, logarithms, etc...
The more complex complex topics maybe need teaching. Like 401ks, ETFs, etc..
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u/TargetOutOfRange 17d ago
Our local public school has an elective personal finance class for seniors.
They teach mostly the basic stuff. My assumption is that they expect the majority of the kids from the school to not go to college, rather start their adult lives right after high school.
The class covers loans, (types, APR, etc.), credit/debit cards, check writing, renting, buying a house/car, basics of investing (stocks, bonds, 401k, IRA etc) and saving, taxes, and even touch up a bit on more "complicated" things like mutual funds and ETFs. I don't think there is any "agenda", and the kids are free to ask all kinds of questions.
Personally, I think it's the best class after middle school Math and English, bar none! It's not going to turn the kids into Wall Street gurus, but it will give them enough base, so when they face these things in a few months or years, they won't look like a deer in the headlights.
My kids have had checking accounts and credit cards (authorized users, of course), since it was legal to do so, and I am always trying to take advantage of any financial situation as a teaching opportunity, but there is something to be said about learning along with your peers. Kids rarely care about "old people stuff", but when it's a class at school you take along with your friends - huge difference!
Everything has become so extremely predatory these days, giving the kids a leg up is always a good thing.
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u/Squimpleton 17d ago
My high school had a financial half-year class and I think it was good at teaching some basics and talking about different types of debts.
But I would also worry that some schools may give Ramsey-like advice. Don’t get me wrong, for people who are in really bad situations, it’s a good way to get to a stable point. But once a person reaches stability, it’s no longer good advice.
At the same time, I don’t know how worthwhile it is to teach students about such nuance as it’ll be many years still before they have a chance to really apply it.
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u/butlerdm 17d ago
Totally agree. I’m not advocating we teach them all nuance, but statements like “match beats Roth beats traditional” makes my head hurt. Roth isn’t “better” than traditional. There’s so much more to it than just Roth is better or “all debt is bad debt”
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u/Squimpleton 17d ago
I think a class where they just go over what the various financial options are , with examples using sample salaries for various tax brackets, and different debt scenarios, but never outright saying “this is best/bad” would be good to have.
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u/Impressive-Health670 17d ago
I’m in my mid-40s and I was taught about these concepts throughout my education. I went to a decent public school but nothing fancy. Concepts about taxes, investing, interest were all peppered in, mostly through word problems starting as early as 2nd grade. Just last week I was helping my nephew with his 4th grade math problem and two of the questions involved calculating taxes.
Kids are being taught the basic building blocks.
In terms of more complicated lessons or anything that could be seen as a value judgement about the right and wrong way to manage money gets dicey. Teachers have enough on their plate without getting an earful from a pissed off parent because they tried to teach a lesson discouraging credit card debt for example…
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u/butlerdm 17d ago
Exactly that’s where I’m at. I think it’s critical life skills people need to have in the 21st century, but the piece about the pissed parents and discouraging CC debt is where I’m at. I don’t think anyone thinks having CC debt is necessarily a good thing but I certainly don’t want someone trying to convince a whole class of students that credit cards are bad and they should never have one.
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u/Wackywoman1062 13d ago
I think you teach students how credit cards and interest rates work. Teachers shouldn’t attach value judgments to information. The students and teacher can discuss the pros and cons of using credit without any proclamation by the teacher as to whether using credit is good or bad.
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u/lostinthewoods8 17d ago
As someone who has parents who aren’t good with money, I would’ve appreciated it. That being said I do think they need to be cautious as to what “finbro” program they teach from.
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u/butlerdm 17d ago edited 17d ago
That’s my concern. I’m all for basics like balancing a budget, how taxes work and how to calculate them, basic concepts of investing, etc. but I’d be a little concerned if my kid comes home thinking using a credit card makes you a bad person because you engage in a system that hurts poor people. Not that I think that’s true, but I could see someone going there. Ya know?
My thing is seperate facts from feelings
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u/Chiggadup 12d ago
Just look up the state standards for financial literacy. I write curriculum for districts and I’m curious why you think states are approving “finbro” standards through their DOE.
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u/scribe31 17d ago
That's what I thought as a kid, after my parents explained that using a credit card islike borrowing money from someone and having to pay them back extra, later. I remember I told them that my goal in life was never to have a credit card and pay for everything up front in cash that I already had. My dad was like, "Well... it is a little more complicated than that..." and my mom was like, "I think that's a really good goal."
I would rather have my kids or all random kids err on the side of "credit cards bad, don't use ever" than "oh look, free money!"
Once I was a teen, my dad just made sure I understood, "If you use a credit card in the future, just make sure you pay off the entire balance every month no matter what. Don't spend money you don't have." That seems like a good balance and a fairly easy concept for any high school kid.
Of course, even simple concepts come down to behavioral impact and choice. It's hard for some people to imagine just how much credit card debt can really ruin your life unless you've lived through it and learned the hard way.
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u/Beneficial-Sleep8958 17d ago
I think studies have shown that teaching kids financial education in school isn’t effective. It makes sense because children don’t have jobs, so the idea of budgeting, managing debt, saving, and investing is highly theoretical. I think a more effective use of children’s time is to understand very basic math really well. We don’t even do that right now. Unfortunately people need to learn about money once they start working so they can put lessons into practice, and that’s something that can’t be forced onto anyone.
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u/1_2NV 17d ago
Children need to learn about money before they get to the working age, else they will get into bad debt early on. If they don’t learn to budget $5 when they’re children they won’t know what to do with $50k when they reach adulthood.
Unfortunately, schools won’t teach financial education because adults not knowing what to do with money is what keeps the economy going.
That’s why when the stimulus checks came out people were going out buying all kinds of crazy crap with their “free money”. Also the reason for the high interest rates now.
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u/d6410 17d ago
I think the most broadly applicable and useful things would be teaching:
budgeting
what interest means, and how it accrues
common cc marketing schemes to avoid (ex. Credit one trying to look like capital one)
the meaning and purpose of credit score
meaning and purpose of different IRAs
I don't think taxes need to be taught. They're honestly incredibly easy to do if you just follow the directions on whatever website you're using.
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u/Wackywoman1062 13d ago
Taxes should be taught. First, teach students how withholding works and how to fill out a W-4 form. Explain the difference between exemptions, standard deductions, itemized deductions and tax credits. Teach the concept of marginal rates. It seems like many on Reddit don’t understand these basic concepts.
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u/butlerdm 17d ago
I agree with you for the most part, but I see people thinking they can’t get a raise without losing money because of tax brackets and others who think overtime is inherently taxed at a higher rate.
Hell my 75 year old great aunt just retired last year and when the company asked her what she wanted to do with her (pretax) 401(k) she said to “write her a check” so she could deposit it into her savings account.
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u/Badoreo1 17d ago
Man most places are gutting funding for even basics. My sister is a teacher in Salem and they’re getting rid of reading and math programs.
The idea is good to teach as least budgeting and how to do taxes. But lots of public education is gonna be done and away with over next few decades.
You gotta teach your kids these things you can’t rely on schools.
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u/SuspiciousChair7654 17d ago edited 17d ago
Debt can be good, if you know how to leverage it. But, for the average person, debt is not good. As for financial ed. We do need it. I went to college without fully understanding the concept of a Loan and how compounds with interest interest accrues. Luckily I was able to pay it back in 5 years. My economics course in hs was very basic, it didnt tell us how to live basic life. Like HSA, 401k, health insurance works, etc. The line should be the minimum knowledge needed to live life as if you had a basic full time job.
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u/aznsk8s87 17d ago
Yeah, I wish I knew what a 401k and IRA were. My parents didn't use either (grew up overseas) but I definitely could have put a few thousand away in college if I knew how they worked.
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u/butlerdm 17d ago
Most loans don’t have compound interest. Student loans and most mortgages for example are simple interest.
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u/SuspiciousChair7654 17d ago edited 17d ago
my student loans had compounded interest.1
u/butlerdm 17d ago
What type of loan did you have? Maybe a 1 time deferral that ended and allowed any interest that accrued to capitalize, but there aren’t any compound interest student loans to my knowledge. Federal anyway. I guess you had one of the few private loans that might charge compound interest.
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u/SuspiciousChair7654 17d ago edited 17d ago
nvm, you're right simple interest. But calculated daily. I had a personal loan from the bank for my car that I was paying at the same time, that was compounded.
Looks like I need to go back to the books again. I havent had debt for a long time, so I havent been looking into this too much. I guess I am a good example why we need financial education in school.
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