It is fair to say that there are few things more important to your long-term financial future than making sure that you are financially literate enough to plan for that future in the first place. So why do so many Americans lack the basic financial literacy skills necessary to do just that? Part of the answer lies with an education system that treats students too generally. We force English students to do more math than they might strictly need at the cost of extra English classes and vice versa for math students.
Our education system is thus too often more concerned with fitting students into an abstract notion of well-roundedness than being practical in addressing their specific strengths and giving them the life skills and tools they need to succeed.
That includes financial literacy, which is why we need it taught in schools — and soon.
Literacy and Debt Issues
Among fellow Western allies, the United States ranks in the lower half in financial literacy. Its students rank far behind those of the UK, Canada, Germany, and the Netherlands in that respect. If you think that problem’s merely “academic,” consider the following:
- We’re facing a $1.5 trillion student debt crisis, the largest such crisis since 2008.
- While students are hardly at fault compared to other factors here, they too often lack the financial understanding to manage their already-dire debt situation.
- Students who take out loans on average leave university with at least $22,000 in debt.
- Household credit card debt levels are the highest they’ve been in a decade.
Teaching Financial Literacy
So what can be done?
While practices such as predatory lending need to be addressed and the whole student loan system is in bad need of oversight and reform, we also need to think of ways to prevent another crisis such as this. Teaching students better, smarter ways to approach their finances in general and lending and investing, in particular, can help them make smarter financial decisions.
And when students are empowered to better manage their finances and their growing place in the economy, we all win.