In the midst of all of the AIG-bonus outrage (nice to see ya angry people, but where were you angry members of Congress a few weeks ago when you approved the bailout package that made an exception allowing contractual bonuses?), there's still talk about the different economic rescue plans that are aimed at homeowners or other Americans who've been caught up as victims in this mess. Sure, it's a controversial part of all of this rescue stuff, cuz some people feel like they shouldn't have to "bail out" people who made bad decisions. I tend to be a rising tide, help your neighbor person... but that's beside the point of this post.
Here's my idea. I think all these stimulus packages should somehow incorporate legislation - and *funding* cuz we all know just how effective unfunded mandates are - requiring every single high school student in America to take a personal finance class.
My high school offered personal finance classes, but it was more on the general/remedial track. The college prep/AP kids never took it. So while I understood the concept of compounding interest from my pre-Calc class, when I became a wide-eyed college freshman I gladly signed up for a high-APR, high-annual fee predatory credit card just to get the free t-shirt. Getting cash out of the ATM sure seemed like free money to me. I was young and stupid, and hadn't really learned enough about the way money works to realize I was digging myself a hole. Luckily, I received a bailout from the Bank of Mom and Dad. But, then in my 20's as an underpaid, overworked non-profit drone, I chose to live in cities that I still couldn't quite afford and I really "floated" my relatively modest lifestyle on credit cards, racking up a balance that I didn't pay off until I was 32. It's a darn good thing I didn't buy a house in the middle of all of that, but I almost did. Had a bid accepted and paid my hand money and everything, and it was just luck that enabled it to all fall through.
Anyway, my point... I was a smart kid, and I'm still a smart adult, but even I've had my problems with credit and financing. There are whole industries out there who thrive on finding people like me or so many others willing to make impulsive and uninformed decisions with their finances.
So -- I think our country and our economy as a whole would really benefit by, as a start, insisting all high school kids learn the basics... how to balance a checkbook, how to compare and not become bogged down by interest rates, how the stock market works* and what a 401k is, how to evaluate different kinds of mortgages, etc. This is all stuff people would really use (unlike, say, the year I spent on advanced trigonometry). I've been lucky to learn some of this stuff along the way thanks to my parents' expertise and patience, and taking advantage of 401k sessions at work, even reading some articles along the way. But it would be so much better if people could learn these lessons BEFORE they make big mistakes, rather than after.
* One of my podcasts takes call-in questions, and the business reporters did a good job handling a guy who called in with a question so basic it almost surprised me, though I know there are millions who probably think the same way. He asked, paraphrasing, "I've lost so much in my retirement account -- but where did all that money go???" The reporters explained very clearly and simply about stocks' value and price fluctuations, and how that wasn't actually real money that was lost, just value. But this is exactly the kind of thing people should learn before they put their money in with such trust and expectations.
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5 comments:
PS:::I had problems leaving my comment...I apologize if this came thru more than once.
My original comment:
I think it would be a good idea...I never learned about money from my parents. So, the minute I was offered a credit card, I took it..."for emergencies."
Well, my first emergency was a CD...then dinner for my friends...then movies...then clothes...It took me many many years (10+) to pay off those emergencies.
I also think part of the legislation should be directed to the credit card companies to stop preying on young adults, who they know can't afford to pay back the bills. I should NOT have been allowed to get as many credit cards as I did. And as long as money is to be made, the companies in Wilmington will keep going after the college kids.
Stef, you certainly hit a nerve there. I agree. J and I had quite a time cleaning up our credit and finances the first year of our relationship. Like you and Scott, I spent my first post-college year hitting the limit on my credit card. I also agree with you 100% on the education piece. J and I actually took a first time homebuyer class from Prince George's County that really walked us through buying and house, including getting your finances in order.
I agree with you completely.. and it makes me wonder where I got it from? My parents never sat me down and showed me a checkbook, talked about credit cards, etc.... but somehow I got it - I've never had credit card debt. But since I don't know how I got it, I don't know if I know how to pass it on.
I did once apply for a card at a ballgame to get the hat. I told them I made $1200/yr (twelve HUNDRED) which was true - i was a full-time volunteer. They sent me a platinum card. I cancelled it immediately. CRAZY.
There are a lot of agencies working on policy and legislation to make this happen, it's absolutely necessary!
I've started to volunteer with an organization (Operation Hope) that lends it's services to schools and community organizations to teach kids some basics about banking, credit, budgeting, etc, and right aways I've seen how useful (and interesting!) this for the kids.
I've pretty much decided this is what I'd like to do with my life, the good timing is unfortunate.
Totally agree with you.
Some really good books for those inclined to learn on their own are WSJ Personal Finance Guidebook and WSJ Complete Guide to Money and Investing. In that order.
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