Nov. 7, 2019
Look back on your high school years for a moment. Which subjects do you use most now that you’re an adult in the real world?
It’s pretty likely you rarely use trigonometry, algebra, or calculus in your everyday life. That’s why you’ve probably seen those funny memes about the lack of personal finance education in schools. One of my favorites says:
“I’m glad I learned about parallelograms in high school instead of how to do my taxes. It has really come in handy this parallelogram season.”
In all seriousness, it’s a wonder kids don’t typically learn about personal finance in schools. Our youth spend hours learning how to use complex math to solve problems that don’t exist in the real world, but they don’t learn real-world skills like how to create a budget or avoid consumer debt.
In a lot of ways, that’s a huge shame. Then again, I’m not sure that school is the place for kids to learn the nuts and bolts of money management anyway.
Money Education Should Start At Home
I’m well aware that saying that schools shouldn’t teach kids about money may be an unpopular opinion, but think of it this way. Middle school and high school teachers are already bogged down by regulations, incessant school testing, and unrealistic expectations from parents and school administrators. Do we really want them to become the sole instructors for something as important as our children’s financial lives?
Not to mention the fact that teachers themselves don’t necessarily have their own finances together just because they work in education.
Some studies show that teachers in particular struggle with excessive levels of student loan debt, and they don’t necessarily receive the pay commensurate to handle it. Plus, having a degree in education with a focus on history or math or English doesn’t make someone an expert on personal finance anyway, right? For personal finance to be taught in schools, teachers themselves would need to study the ins and outs of proper money management and investing. That’s the only way they could possibly impart those lessons to our kids.
Plus, teaching kids basic financial ideas like how to create a budget and how to file a basic tax return may not be enough — at least not for me. Personal finance is indeed important, but the basics like how to file a tax return don’t go deep enough.
Regular personal finance education teaches kids how to get by, but it doesn’t teach them how to live.
Teach More Than Money- Teach Kids About Financial Independence
Of course, I’m hinting about the FIRE movement — or “financial independence, retire early” if you haven’t heard of it. The FIRE movement goes against the grain of standard personal finance by asking people to save more of their income while they live on less. The end goal of such a strategy is building up enough money so you can retire early or cut down to part-time work earlier than usual — if you want to, that is.
While I’m not a big proponent of living extremely frugally for years so you can retire on a limited income, I am a fan of what is often referred to as FAT FIRE. Think of FAT FIRE as FIRE for people who want to live well now and later on in their lives.
But FIRE is really about a lot more than money. I believe in teaching kids to create lifestyles where they have options. By saving more money early in life, avoiding massive student loans and consumer debt, and learning how to invest early, kids can make sure they are never “stuck” in circumstances they cannot change when money is always an issue.
I mean, most kids today are taught to go to college and earn an outrageously priced college degree. From there, they’re taught to get a job with a big employer who will offer coveted workplace benefits like a 401(k) match and health insurance. And even then, they’re taught to stash away 10% of their income in a retirement account and let compound interest do the rest. If they go this route, they can maybe, hopefully, retire by the age of 65 or 70 and enjoy life a little bit before they die.
Is that enough? I don’t think so. I want more for my kids than just knowing how to create a budget or pay their bills on time each month. I want them to have the freedom to dream big — and the knowledge required to build a lifestyle they won’t regret one day.
There are so many benefits to financial independence that get overlooked. For example, kids who learn to become financially independent as adults can:
- Have the freedom to start their own businesses instead of being tied down to an employer
- Quit jobs they hate in order to pursue something else
- Take time off to travel, spend time with their children, or follow a lifelong dream
- Live without the stress of debt
- Sleep comfortably knowing they’ll never be a financial burden on their own children
I don’t know about you, but I think all kids should have access to — or at least know about — the benefits I’ve listed here. They need to know that you don’t have to work until you’re 70 if you’re willing to live on less, and that retirement accounts aren’t just for old people — they’re tools that can help them build wealth that will last a lifetime.
They also need to know that debt is a curse, and that buying clothes, cars, and electronics on credit comes with consequences that can last your entire life.
Don’t rely on schools to teach your kids these important lessons about financial independence. Instead, take the time to learn more about investing and money so you can teach your children yourself.
More importantly, show your kids how to make responsible financial decisions that leave your family in a better spot. They may not want to listen, but they’re watching everything you do.