Introduction
As a former high school student and current SEO expert at Google, I believe that financial literacy should be a mandatory subject in all U.S. states. In today's world, where financial decisions, often made poorly, can have severe consequences, teaching teenagers to manage their finances effectively is crucial.
The Evolution of Financial Education
Remember when home economics classes were the norm? These classes were once about teaching life skills, including basic financial management.
However, as parents became less involved or capable in guiding their children, it became apparent that these skills were not being adequately taught at home. This led to a generation that is not as financially savvy as it should be.
Why Should High Schools Offer Financial Literacy?
Financial illiteracy is a widespread issue. Just look at the growing popularity of payday loan companies. This number is alarming and a stark reminder that many people struggle to manage their finances effectively.
A basic course in financial literacy could equip high school students with essential skills. These skills could include understanding income and expenses, managing credit, and investing money.
The Complexity of Financial Formulas
There is a common belief that financial literacy should include the teaching of complex formulas, such as the loan payment formula. For instance, the formula for calculating a loan payment is not a mystery. However, as many Facebook users struggle with basic math problems, it’s important to consider the accessibility of this information.
When I was in high school in the 1990s, this type of calculation was only taught in Grade 12 Advanced Math. High school students were required to take math up to Grade 10, and not everyone took advanced courses.
The approach to teaching financial literacy should be different from the advanced math curriculum. Financial education should focus more on practical application and understanding the concepts rather than delving deeply into the mathematical derivation of formulas.
A Personal Experiment in Financial Literacy
As an electrical engineer, I took many math courses and was well-versed in financial concepts. I learned accounting, computer programming, and economics. However, even when we learned how to complete a typical income tax return in accounting class, it wasn't mandatory.
Interestingly, when I brought my own computer to a car dealership and calculated car loan/lease payments faster than the dealers, it didn't require memorizing a complex formula. Instead, it involved using a common tool like Excel or an online calculator. This shows that with the right tools, complex calculations can be made much easier.
Conclusion: A Simple Solution
The key is not to scare people with complex formulas but to make financial literacy accessible and understandable. Math teachers should be encouraged to teach financial formulas as tools rather than theoretical exercises. If this approach can be implemented, it could significantly improve the financial literacy of future generations.