Why I Believe Financial Education Won’t Work
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Every so often, I read an article or see a story about the United State’s dismal failure in the financial education department. High school and college and beyond seem to offer no guidance as far as how to budget or invest or the value of compound interest or the risks of credit card debt. However, I simply don’t believe that any form of financial education will be enough to change peoples habits or make any kind of difference.Financial education won’t work for several reasons. The big reason is that money is like dieting or good nutrition. We all know we are supposed to Strive For Five (fruits and vegetables) and stay away from sugars and McDonalds. But, there is still a McDonalds on every corner and I haven’t heard about too many of them going out of business. Knowing something on an intellectual level definitely doesn’t always correlate to doing something that feels like deprivation on an emotional level. In fact, some might argue (judging by the obesity epidemic in America) that knowing something or being educated about it makes little to know difference in people’s actual behavior.
Another reason is that for all the positive messages out there, or all the education, we would still be bombarded by a series of negative images from the time we are children. Television commercials are one of the biggest sources of negative reinforcement out there in the world today. Just look at the Discover commercial or that Macy’s commercial where the girl is going out on a blind date and requires a total makeover form each department at Macy’s because you obviously can’t find love without spending a crapload of money on designer digs. In fact, TIVO (or DVR’s) might be the best thing that has happened to Americans for a long time…. if we can zoom right past all the commercials, we’ll never know that we are supposed to want to drink the new latest Soda Flavors in our fancy new clothes with a bunch of brand new furniture from Lazy-Boy (2 chairs for the price of one!)
3rd of all (not a proper expression, but oh well!) our relationships with our money is one of those things that it is almost impossible for most people to be completely rationale about. Everyone, even the most fiscally responsible among us, has a weakness. If we have debt to pay off or if we are super motivated or super disciplined, we might overcome the weakness by avoiding the source of our spending achilles heels. But, for most people, its very difficult to take a cold hard look at their finances and make realistic decisions in every aspect of their lives. These lapses might be minor, and not be a big deal for some people- if you like books and spend a few hundred dollars a year on books for example, it might make a dent in your ability to save but unless you are really scrimping to get by or in a lot of debt, it probably won’t break you. However, as we see by the mortgage crisis, if your weakness is something bigger like falling in love with a house you can’t afford, the affect can be detrimental. And, I’m sure at least some of these people taking the mortgages had a nagging little thought in the back of their heads saying “I shouldn’t be doing this!” but they did it anyway because it is too hard to be rationale all the time when it comes to purchases.
Anyway, so do you guys agree or disagree? Will financial education work and should we have more of it in this country?
October 27th, 2008 at 5:31 pm
Well, at least it might give people a fighting chance against all of the bad info they get from parents, friends and the media. After all, educating teens about safe sex won’t prevent all pregnancies or diseases because teens will do what they do. But does that mean we decide it isn’t worth it to teach the facts? I would not have been able to claim shear ignorance had I gotten pregnant at 16, but I sure as hell could claim ignorance when I took every cent they would give me in student loans, as I had been taught absolutely nothing about finance.
I know McDonald’s is bad for me, and at times, that information does help me make better nutritional decisions. But if I do decide to go for that Big Mac, I can rightly claim that I was never taught that charging the purchase on my credit card is dumb. I feel that I was woefully unprepared for life as a financially savvy adult by my parents and the school system.
You know, the more I reply to this post, the more I am convinced that you have posted this just to stir up responses. Finance is not about just not spending money you don’t have, and knowing how to write a check, it is about ever-more complex financial instruments and how personal choices can lead to huge repercussions for our country.
In short, OF COURSE we should be offering information about personal finance, at every level of education. Had I had the info, I might not just have paid off the last of my student loans at almost 40, I would not have ever declared bankruptcy, and I would have a much better outlook for my financial future. And I am one of the more financially savvy people I know (now). If we stopped educating people on every topic that people continue to be stupid about, formal education would last about 3 months.
October 28th, 2008 at 1:30 am
Financial education needs to be available and taught.
It may or may not sink in.
Whether or not the lessons are applied in a responsible manner is up to each individual’s personal choice.
October 28th, 2008 at 8:56 am
[...] new here, you may want to subscribe to my RSS feed. Thanks for visiting!I got a few comments in yesterday’s post that I wanted to reply to, and I figured I would clarify the point that I made for all of my [...]