Last week I read a Blog post written by Brett Nelson titled “Financial Illiteracy Is Killing Us.” Nelson states that the financial education of our students (High School and College) is extremely poor. As an example of weak financial skills he recounts segments of the 2009 documentary “I.O.U.S.A.” where interviewed Americans couldn’t explain the “trade deficit” nor could they properly quantify the then $8.7 trillion national debt. (The latest data I’ve read indicates that the national debt is now above $13 trillion and is projected to climb to $18+ trillion by 2018.)
Whether an individual can properly explain the trade deficit or quantify the national debt is probably irrelevant in gauging their understanding of basic financial strategy…but I will leave that for another day.
The problem I have with this post and its reference to the I.O.U.S.A. documentary is their claim that the responsibility for teaching financial literacy to America’s youth rests upon the school system. The post states “….our rotting education system that ultimately led to this problem.” What happened to personal responsibility? When did parents abdicate their responsibility for teaching their children sound financial principles to the school system?
Personally, I believe that the place for teaching sound fiscal practices is in the home. This responsibility rests squarely upon the shoulders of parents. Governments, educators and even businesses can certainly reinforce these financial teachings, but they shouldn’t bare the primary responsibility for these teachings.
I recognize the dichotomy of expecting a parent, who is in debt, being contacted by collection agencies with auto dialers, attempting to teach fiscal responsibility. But these situations are definitely not the norm. Most Americans, in my opinion, do take their finances seriously. Most Americans do pay their bills promptly. Most Americans aren’t being contacted by credit and collection agencies weekly concerning past due accounts.
While recognizing that some adults have lost their “financial way,” it is obvious to me that the government is more out of control with its finances than the average American citizen. Is it realistic to believe that a government will be able to teach correct financial principles when it has accrued over $13 trillion in debt, has a massive trade deficit and can’t balance its own budget? I believe the answer is a resounding no!
Many financial experts, bankers, economists and successful entrepreneurs are shouting at the tops of their voices that the American people, in general, need to be more careful with their personal finances. They preach that we need to:
These experts urge consumers to stop seeking instant gratification by purchasing a “want” with credit card or another form of revolving debt. Instead, they encourage American’s to save a little money each and every paycheck and then acquire their “wants” once enough monies have been saved!
Perhaps I’m talking to the proverbial choir. I’m confident that most of you reading this post right now are doing your utmost best to live by solid financial practices. Keep up the good work! Don’t give up! Our economic downturn has lasted longer than many experts predicted it would last. However, within the recent past some positive growth indicators have appeared in economic reports. Once we’ve worked our way out of the current financial market meltdown, I hope we take personal responsibility and not run wild once again with unsustainable purchasing and debt habits.
I encourage you to spend some personal time with your family discussing finances. Teach your family members how to balance a checkbook. It’s ok to demonstrate self-restraint and not purchase the latest electronic gadget or newest clothing style. Stop waiting for someone else to teach your family about finances. Begin today to properly follow, demonstrate and teach sound financial principles. If we do this then the next financial meltdown will not be as traumatic since we will have properly saved and reduced our personal debt.
This article was written by Dave R