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January 16, 2014 6:53 AM   Subscribe

“Financial education supports not only individual well-being, but also the economic health of our nation,” said Federal Reserve Chairman Ben Bernanke in a speech last year. In case that doesn’t make clear what’s supposedly riding on this effort, in 2012 the U.S. Senate held a hearing titled “Financial Literacy: Empowering Americans to Prevent the Next Financial Crisis.”

There’s only one problem: mounting, resounding evidence shows that financial literacy education doesn’t work.

posted by frimble (57 comments total) 26 users marked this as a favorite

 
“We have this idea that if we teach kids good habits they will use them. But it’s just not true.”

Correct, that's why one must *train* kids, not merely teach them.
posted by Ardiril at 6:59 AM on January 16 [8 favorites]


Dave Cannon may attribute his financial troubles to a lack of discipline and poor money management, but when I asked him how his credit card debt grew, he told me it was medical bills. “My family wasn’t in a position to help,” he offered by way of explanation. No amount of financial literacy can change a situation like that.
geez what is it with Americans and their inability to just learn plain dollars and sense??
posted by theodolite at 7:04 AM on January 16 [23 favorites]


Personal shortcomings and mistakes in managing money can indeed worsen the financial situation for many of us, but even these may be more a function of stress and scarcity than ignorance.

Bingo.

When people make bad decisions because they're really desperate, knowing how bad payday loans are isn't going to make them any less desperate.

And I'm not at all in the payday loan range of financial decision-making, but it's always been surprising to me how much spending is social in nature -- where you feel like "All my coworkers spend X much money on clothes, so it must be OK for me to do so" or "Going out for lunch instead of bringing it from home, that's just a normal thing you do," or feeling like you're bringing all your friends down if you can't go out to the restaurant with them. It's a gut thing and it's really powerful and it's hard to override that with logic.
posted by Jeanne at 7:07 AM on January 16 [21 favorites]


I came prepared with the same pull quote as theodolite, but also to scoff at the idea that the average american, living in a consumer based economy, will have any influence at all in preventing 'the next financial crisis', since they didn't create the last one.
posted by OHenryPacey at 7:09 AM on January 16 [40 favorites]


It's like the government putting health warnings on cigarettes - health education - and than claiming it doesn't work because people are still smoking.
posted by three blind mice at 7:11 AM on January 16 [1 favorite]


theodolite has it - individual irresponsibility is a small problem and red herring when a financial system is run by ghouls.

Convincing my kids that commercial banks and credit card companies are predators - and that debt to them is to be avoided at all costs - is the key piece of financial education that I hope to impart to them.
posted by ryanshepard at 7:11 AM on January 16 [14 favorites]






Ah yes, the adult version of pinning someone down and shouting "stop hitting yourself!"
posted by The Whelk at 7:21 AM on January 16 [22 favorites]


It strikes me as something that is necessary but not even close to being sufficient to solve the problem. It is seductive to believe that financial literacy education is both necessary and sufficient, because it reinforces certain things a lot of us like to think: the sort of rugged individualism notion that we are all the masters of our own lives and dependent on no one else for success, and the corollary that when someone fails it is their fault alone and no one else's.
posted by MoonOrb at 7:27 AM on January 16 [13 favorites]


This article is good and worth reading, but I think it confounds a lot of different consumer financial problems. On one end you have folks trying to get by on minimum wage, any manner of heroic planning and self deprivation isn't going to completely solve the problem. On the other end you have folks who make good salaries but literally don't understand what credit card interest means and end up in perpetual debt. Then on top of that the article also talks about mortgages, but the kind of financial literacy required by someone who can afford to buy a house is wholly different from the other scenarios.

I agree with the first comment here that you have to train children about money management, not just teach them the facts. We live in a society where literally every surface is covered with advertisements to buy things, to spend more money. And US culture looks at acquisition as a moral imperative, we're three generations away from Depression-era thriftiness as a value. Something has to counterbalance all this consumer culture.

I'd love to read an article about the impact of the credit card bill changes in 2009. Does showing people the impact of only paying their required minimum change how they pay off their credit card debt? How they accumulate it?
posted by Nelson at 7:32 AM on January 16 [5 favorites]


This is wrong. There are two problems with financial literacy as taught now. First, like all education, the effects decay with time, this is the conclusion of the Management Science piece the author cites. That means, unless it is reinforced repeatedly, skills taught as children may not affect adults. Secondly, most financial literacy is bad.

Both of these problems can be worked on, and saying "this doesn't work, so therefore abandon it" is stupid. There are lots of people working to make this better, and it is important that we try to get this right, not give up on it.

Take the non-profit Doorways to Dreams Fund, which, despite its odd name, is a very influential organization that has been working on improving financial fairness for lower and middle income Americans. I have worked with them on some of their attempts to gamify financial education. RAND just completed a study on this project, and found a number of significant effects on players in terms of increasing understanding and empowerment. You can play some of the games here.

I found this article really frustrating.
posted by blahblahblah at 7:33 AM on January 16 [9 favorites]


Even in the cases where financial literacy is useful, rather than a poor substitute for a social safety net, the fact remains that the world of finance is overrun with hustlers and con artists. The only financial advice you actually need is free and can fit on a index card. Everything else is just grifting.
posted by Cash4Lead at 7:35 AM on January 16 [3 favorites]


MoonOrb -- exactly. America is very invested in the narrative of personal success and failure. It's also very invested in not looking behind the curtain at the systemic problems that make the playing field not at all level (not to mention the huge number of areas where our individual decisions don't have as much impact on our lives as the decisions of a bunch of competing entities which do not even know we exist, much less care for our good).

Oh, no. I just realized that my view of personal economics is essentially Lovercraftian....
posted by GenjiandProust at 7:35 AM on January 16 [7 favorites]


this essay sort of misses the real scam which is that "financial education" is usually part of "credit counseling" i.e. convincing people to pay back delinquent loans that they might otherwise default on immediately. even if you eventually declare bankruptcy, credit counseling is about wringing the last cents out of you before you do.

so many things in US society come down to Lucy convincing Charlie Brown to have one more go at the football...
posted by ennui.bz at 7:37 AM on January 16 [17 favorites]


Financial literacy is its own good (and should definitely be taught!), but it's not a substitute for a safety net and it's not going to prevent a financial crisis caused by lax regulations. Expecting a layperson to be as financially savvy as a mortgage broker is like expecting a layperson to be as knowledgeable as a doctor or a lawyer. We can't all know enough to know if we're being provided good legal advice or good medical care, so we depend on professionals who have a legal responsibility to us to give us good advice. (Of course this is not the case with financial professionals, I just think it should be).

Of course kids should learn about interest rates, debt, the compounding effect of saving (and please oh please won't someone, anyone, teach them about marginal tax brackets?) but the idea that that education is going to make someone immune from a capitalistic culture and a system that sets out to exploit them is misguided at best.

I mean, I consider myself pretty financially savvy, but that didn't stop me from falling into quite a hole recently with the IRS when I had a freelance job that had a policy of paying 6-8 weeks after being invoiced. The freelance part meant that I was responsible for my own estimated taxes every quarter, the paying 6-8 weeks after invoice meant that I was always just catching up to my bills and never had enough money to send to the IRS. (Of course, this is what an emergency fund or a business slush fund should be for-- this job followed many months of unemployment which had depleted all my reserves). I kicked myself for getting into the situation, but no amount of financial literacy would have prevented it. I knew I owed the taxes, I knew the consequences of not paying them, I just -- quarter after quarter-- didn't have the money.
posted by matcha action at 7:54 AM on January 16 [4 favorites]


Financial education is great. Right up to the moment when the really smart guys on Wall Street decide to fuck things up for profit. I know more than a few really smart, savvy people, who were doing everything right with their money, who still saw 30% of their retirement funds disappear.
posted by Thorzdad at 8:02 AM on January 16 [3 favorites]


I have this conversation all the time:

Gentleman in his 50s: "You know what we REALLY should be teaching kids in school? They should have to take a course on basic financial literacy in high school!"

"We already have that. Kids have to pass the course in order to graduate. Illinois has had that for FORTY YEARS now. YOU PERSONALLY had to take this class and pass the test to graduate."

"I did? Oh ... yeah ... I guess I did ... Well -- good then, I guess. Is it working?"

"You tell me."

I mean I guess it was good to learn the general concepts, but most of the things were just so abstractly far in the future and foreign to my experience (kids can't make installment contracts!) that I didn't pay a lot of attention to the whole thing except to learn what I needed to pass the state test. (The one concept that stuck in my mind was actually ARMs, so when that whole crisis started I was like, "Hey, I know this!") But, yeah, our state's citizens do not seem particularly more financially literate than those in neighboring states who don't have to take such a test. I think -- well, I can spitball a lot of ways I'd improve this, but it'd require ongoing community outreach from unbiased educational organizations as people transition into actual adulthood, and it'd be tough to get the same 95% reach as any high school requirement can get. And also, you can't financially educate people out of systems designed to screw and exploit them; just help them protect themselves from the worst excesses.
posted by Eyebrows McGee at 8:14 AM on January 16 [8 favorites]


Expecting a layperson to be as financially savvy as a mortgage broker is like expecting a layperson to be as knowledgeable as a doctor or a lawyer.

There were plenty of un-savvy mortgage brokers back in the boom. They sold the product without a clue as to what it involved. Good times while it lasted. Many are now back to tending bar.
posted by IndigoJones at 8:28 AM on January 16


Sometimes Life Happens. I KNOW not to ring up a ton of credit card debt but I was unemployed and had to move across the country for a job or wind up homeless, so I charged it all and am still paying it back. It's only recently gotten to a point that I can get personal loans with much nicer interest rates for Operation Oh Crap We're Moving Drop Everything and that is, ironically, because of all the credit card debt I rang up and paid off in my nomadic years.
posted by Ghostride The Whip at 8:30 AM on January 16


"We already have that. Kids have to pass the course in order to graduate. Illinois has had that for FORTY YEARS now. YOU PERSONALLY had to take this class and pass the test to graduate."

Really? I grew up in Illinois and don't remember taking any financial literacy courses.
posted by gyc at 8:31 AM on January 16


I might be in less student loan debt if i had been more financially savvy but i doubt it.

That student loan "refund" meant i could pay rent and buy groceries because the full time job i was working so i could have health insurance while going to school full time so that i would be able to get a real job in 4 years rather 6 or 8, well that job didn't pay quite enough and i couldn't get a part time job because i already had school.

So i took out more than i needed but i didn't see how to get the degree that everyone drilled into my head i needed or i would end up on welfare. I was the first in my family to go to college. They didn't want me to end up in the military or the factory.

I didn't, and i think i am the better for it, but man. I'll be paying that off forever unless i somehow start making twice as much as i make now.
posted by sio42 at 8:36 AM on January 16 [3 favorites]


Some video of the author promoting the book
posted by IndigoJones at 8:37 AM on January 16 [1 favorite]


There were plenty of un-savvy mortgage brokers back in the boom.

They weren't un-savvy. They were sales people that never gave a shit about the financial appropriateness of what they were selling in the first place. I'm sure some of them were clueless neophytes, but most just cared about maximizing the commission potential of each deal.
posted by COD at 8:38 AM on January 16 [4 favorites]


Here's the McDonald's video mentioned in the article.
And here's the game Spent

I think the eventual point of the article, and the game Spent, is that for a lot of people, the system is rigged. There's no amount of saving that will get you out of debt. In this situation, the idea of financial education is kind of a cruel joke.
posted by eye of newt at 8:48 AM on January 16 [2 favorites]


From the article:
Spent was designed a few years ago for the North Carolina charity Urban Ministries of Durham. The concept is simple. The gamer assumes the role of a low-wage worker—like, say, someone at McDonald’s—attempting to get by until the end of the month. Players are faced with a relentless series of decisions and tradeoffs, and almost anything—a gift for a child’s birthday, a plea from a family member to help pay for needed medication—can send them into a financial downward spiral.

Needless to say, it’s just about impossible to achieve anything resembling financial success in the game of Spent. And that’s the point. “It challenges the dominant framing of financial insecurity as wholly a problem of ignorance and irresponsible consumer behavior,” Arthur told me.
I hope this game becomes this generation's Oregon Trail. Financial destitution is a more likely threat than dysentery crossing the Rockies.
posted by Pirate-Bartender-Zombie-Monkey at 8:50 AM on January 16 [12 favorites]


gyc: ""Really? I grew up in Illinois and don't remember taking any financial literacy courses."

It's been the law since 1967, so 47 years. Here's a 2009 report. It's usually called "consumer education" and it's generally a quarter-long or semester-long class (some schools offer it opposite the mandatory 10th-grade health class, so you do one fall semester and the other spring semester, in the same time slot). You used to be able to take the test without taking the class and, if you passed, you could skip the class -- the key point was taking the test. But I believe you are no longer allowed to do that. Current governing statute is here.
posted by Eyebrows McGee at 8:50 AM on January 16 [2 favorites]


The Spent game was created by mefi's own missjenny and had an FPP in 2011.
posted by theodolite at 8:57 AM on January 16 [12 favorites]


OHenryPacey: "I came prepared with the same pull quote as theodolite, but also to scoff at the idea that the average american, living in a consumer based economy, will have any influence at all in preventing 'the next financial crisis', since they didn't create the last one."

Have we ever? Serious question: Has any financial crisis ever been attributed to the spending habits of the average American?

One could say that the recent housing bubble was an example, but IRL that was banks marketing mortgages to people that couldn't afford them, and then pawning those off on others in bundle deals. A sort of fraud, in fact: it is expected (and legally required) that banks will not knowingly create loans that are financially unviable.

Legally required, except when it wasn't. Which led to the Great Recession.
posted by IAmBroom at 8:58 AM on January 16 [2 favorites]


The problem is not that financial literacy fails. It's that teaching financial literacy comes primarily from parents and watching parents. That's why, unfortunately, it tends to be generational when it's absent. If you learned the "right" way to do things in school, but your mom is still doing the other way, which are you going to listen to?
posted by corb at 8:59 AM on January 16


bukvich: "Don't buy stuff you can't afford."

The US is not a personal bank account, and should not be run like one.

By your advice, we should have quit WWII when the defense budget exceeded the tax income.
posted by IAmBroom at 9:05 AM on January 16 [5 favorites]


This piece does jump a little too eagerly from "financial education doesn't solve everything" to "financial education is a complete waste of time!" It's certainly true that a population of well-educated, savvy consumers would still exist in an economy which would occasionally go through financial crises. Financial crises are emergent phenomena that are not dependent upon individual poor decision-making or individual malicious acts--although both can exacerbate the crisis.

Still, it is sobering to realize just how little impact financial education has on behavior. This is a good argument for "opt-out" systems that default people into financially sound actions. It's also a good argument (#124,546,823 I believe) for socializing large aspects of financial risk (unemployment, health etc.) so as to make much of this moot.
posted by yoink at 9:09 AM on January 16 [2 favorites]


So, financial education... I recently had this conversation with a coworker:

Coworker: Why didn't those fund managers change how they were spending our money when the market was crashing?
Me: They aren't allowed to. They have to follow the prospectus.
Co: Why don't they tell us about that?
Me: They do.
Co: I was never told that.
Me: Yes you were, when you joined the company. [We argue a bit over whether or not he was told funds follow stated investment paths.] And we have 401k Q&A seminar later this week for the upcoming year, so you should attend.

Later that week...
Co: I know they won't answer my questions, so I didn't go.
Me: Wanna make a $1000 bet? Wanna buy some land? Want me to protectorize your bank account username and password? Bet I can make your VISA card disappear...
posted by IAmBroom at 9:11 AM on January 16 [4 favorites]


"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires."
-John Steinbeck

Become financially literate, peasants. If you knew what you were doing you wouldn't be ground down and broke and hanging on by your fingernails.

This is America. If you're not rich, its your own damn fault and quit blaming the system that made a few rich as Croesus while fucking over most everyone else with fraud & Econopocalypse.

Never EVER look at the bankster behind the curtain.
posted by Pirate-Bartender-Zombie-Monkey at 9:18 AM on January 16 [4 favorites]


My high school financial literacy class consisted of learning about mortgages and the tax system and how to fill out paper tax forms. Nothing that 14 year olds care about.
posted by sio42 at 9:23 AM on January 16


Kids don't care or even need to know anything about financial literacy. They should teach it once a year, every year in college.
posted by Steely-eyed Missile Man at 9:27 AM on January 16 [1 favorite]


The economy runs by people feeling they need to consume more than they need to care about their financial situation. If teaching financial literacy worked, it would be illegal.
posted by Obscure Reference at 9:40 AM on January 16 [5 favorites]


Have we ever? Serious question: Has any financial crisis ever been attributed to the spending habits of the average American?

There's a whole industry dedicated to telling the temporarily embarrassed millionaires that their embarrassment would end if they would stop buying that $3 latte and instead put it aside towards their future ludicrous volumes of wealth.

There's best-selling books. There's speakers. There's even an entire theology of material wealth and prosperity along with it's good-looking, white male hawker.

These charlatans all gain traction in America because the thought Capitalism didn't win, Communism failed first is a terrifying paradigm shatter for most of us, and people desperately want to believe not only that the system works, but that they can work it successfully.

To me it's not specifically about blaming spending habits. That's just the current tack they're taking.

The goal is keep people from questioning the system. The goal is to keep people invested in keeping the system running.

And never look behind the curtain.
posted by Pirate-Bartender-Zombie-Monkey at 9:48 AM on January 16 [5 favorites]


mounting, resounding evidence shows that financial literacy education doesn’t work.

Why would it, when whole industries are built around nickling and diming people to death, sometimes literally, who have the politicians in their pocket. making sure any laws restricing their parasitism are struck down as "unfriendly to business", at the same time making sure the law is on their side when it comes to getting their pound of flesh.
posted by MartinWisse at 9:54 AM on January 16 [2 favorites]


resounding evidence shows that financial literacy education doesn’t work.

1st off one would have to decide on what the "proper" education is going to be.

Is the claim going to be made that the 'economy' is a 'free market'? If so - how does 'free market' turn square corners with the various levels of regulation in that 'free market'?

In this education, is one going to claim that one 'school' of economics is the right one and all others are 100% bunk? Because I'm sure we can toss 'Chicago followers' in a cage with dome 'Miese followers' along with some adherents of whatever other 'schools' (Technocracy as an example) and have hours of 'entertainment' watching the bloodletting.

The 'classic' 'investment' advice revolved around getting 10% Gold for bad times and looking to spend 30% on food. What happens when the 5-10% on food shifts back to the historic norms or become more expensive due to Phosphorous/water limitations?

If you follow the education that is deemed 'best' today - what happens as robots advance and start unemploying people - what happens to that 'best' advice?

Lets say you opt to follow the idea of 'investing' in real estate to get passive income....now how do you deal with your 'investment' when the local building inspectors decide to write up each and every property for violations of the local codes .... going so far as writing up 'not snow shovelling' when the airport high that day was 45 degrees F (and all the snow on the ground was locally gone 1 week before and 3 days after the write up)

What about the advice of "buy and hold" stocks - while the bulk of trades in the market are measured in less than 10 seconds?

What if the 'economy' and all the built out infrastructure was based on sub $10 a barrel oil and oil is $100, $200 or $300 a barrel?

How does your 'ideal education' address the flow of money from other nations in the style of the Roman/Spanish/The Sun never set on the Brittish Empire and the flow of money changes due to the change in the global empire structure?

Doesn't proper 'education' on how to react to stimulus need to have consistent inputs and proper recognition of what the system is and how that system actually works? Now on this whole idea of education about investing - care to show how the inputs will remain consistent and how the claims about "the system is called X and works like Y" is correct so that the education will be useful?
posted by rough ashlar at 10:00 AM on January 16 [3 favorites]


Become financially literate, peasants.

Until you manage to bring about The Revolution, yes, I think it probably is valuable for people to be financially literate. Ranting about "the system" and "the curtain" is ridiculously useless. I think a reasonable goal is giving some people tools to control the things that can be in their control.

The bugbear for me is credit card debt, because I know a lot of people who've gotten in trouble with it. Not out of temporary crisis or need, but simple ignorance. Far too many people think "I have a $5000 credit limit" means "I have $5000 I can spend", and there's whole industries who prey on that misconception. Teaching people to avoid that trap is practical change. At least until The Revolution comes.
posted by Nelson at 10:04 AM on January 16 [4 favorites]


Back in High School (~1985ish) I took a class in investing. The stock market was in a downturn, had been for a while, showed no signs of recovery -- one big assignment was to invest a fictional $500 and see who got the best rate of return. Nobody in our class made any money investing in stocks, and I got downgraded on the assignment because I had bought bonds instead of stock, even though that gained a little over the 4 months or so. Despite these results, though, the teacher insisted investing in stocks was the only sensible long term savings option. Considering her other claims, and other classes I had to take from her, I'm pretty sure she was just a very bad teacher. My point? Financial education only makes sense if there's some vetting of the teachers; unlike sciences, math, or similar studies where there's some objective standards, investment options and strategies change so often that once you've covered the basics, anything else seems to be little more than pop culture "strategy of the day" or just too archaic to be useful by the time it trickles down to the classroom.
posted by Blackanvil at 10:15 AM on January 16 [1 favorite]


Until you manage to bring about The Revolution, yes, I think it probably is valuable for people to be financially literate. Ranting about "the system" and "the curtain" is ridiculously useless. I think a reasonable goal is giving some people tools to control the things that can be in their control.

Even if the things they can control do have little effect on their overall results? isn't that kind of like people in a plane worried that the pilot is both drunk and wearing the only parachute being instructed about operating their seat back? Control the things you can control.

"Free your mind, and your ass will surely follow".

True financial literacy would be to realize that the deck is stacked, the game is rigged, there is no real "win" scenario for most, and most of us were issued "Dysentary" cards from the beginning.
posted by Pirate-Bartender-Zombie-Monkey at 10:15 AM on January 16 [2 favorites]


Kids don't care or even need to know anything about financial literacy. They should teach it once a year, every year in college.

I cared a lot about financial literacy as a kid, mostly because I hated having to deal with all of the problems we faced growing up poor, especially after my single mother's medical bills bankrupted us and we had to rely on welfare programs. I saw her spend hours in the bathroom puking after chemotherapy treatments before dragging herself to work and stressed out of her mind from living paycheck to paycheck while struggling to pay rent and put food on the table. Privileged kids don't care or need to know anything about financial literacy, sure.

College was expensive enough in the 90's that I kind of resented having to take any classes outside my major, especially in fields that I already thought I was well-versed in. I can't imagine having to pay today's tuition rates and take the same class every year over and over again for a subject I was able to learn on my own. Maybe if it was a seminar I could have attended outside of my normal curriculum or a class I could have tested out of.
posted by Thoughtcrime at 10:21 AM on January 16 [3 favorites]


Ranting about "the system" and "the curtain" is ridiculously useless.

Oh please, do show a location where discussions about what 'the system claims to be' VS about what 'the system is' that don't end up in rant-land?

That way The Blue will be spared such 'ridiculously useless' discussion.
posted by rough ashlar at 10:29 AM on January 16


Privileged kids don't care or need to know anything about financial literacy, sure.

If you have no assets with which to be financially literate, then the education does you no good. As for learning it on your own, it's pretty clear that doesn't happen generally. Your personal experience is not generalizable to everyone.
posted by Steely-eyed Missile Man at 10:39 AM on January 16 [2 favorites]


This has caused me to reflect on my own education in financial literacy, and I think it comes down to this: fundamentally, what I needed to know was taught to me by my mom, who modeled this good behavior: live beneath your means and invest for the future.

Everything else I learned about compound interest, predatory lenders, diversification of investments, favorable tax treatment, etc. would be useless to me without that first fundamental principle.

Of course, even that first fundamental principle is useless if you're in the position where you simply can't live within your means and invest for the future, which is just one reason why this notion that teaching financial literacy is what's really needed to address our nation's financial difficulties is completely silly.

But even if you were to accept that there is some utility in education on financial literacy, I'd argue that the key message is that we should strive to live within our means and invest for the future, and it's not until this is taken onboard and internalized will there be any value in explaining how a checking account works or why I shouldn't sign up for 9 credit cards as soon as I turn 18.
posted by MoonOrb at 11:04 AM on January 16 [3 favorites]


"It's like the government putting health warnings on cigarettes - health education - and than claiming it doesn't work because people are still smoking."

Well, except that there's evidence to show that the warnings work in increasing health knowledge and decreasing smoking, whereas there's no evidence that financial literacy education works.

So, no, not like that very much at all.
posted by klangklangston at 12:09 PM on January 16


We had financial literacy classes in middle school and high school; the middle school one I remember better, because it was where I learned to use a checkbook and because we had a variety of options to accumulate scrip that could be redeemed for candy. I was great at that class — one thing I remember in particular was that it cost more to select what kind of candy you wanted as opposed to getting a grab bag, but I got pretty good at reselling the unwanted candy in a partnership with a couple of other friends. We also pretty quickly figured out that you could sell the candy to other kids outside of the class for real money too.

Despite all that, actual financial literacy is something that really stresses me out — both student loan debt and saving for retirement and making any sort of large financial decision, it's just damn overwhelming and I try to just get as much millage as possible out of automatic payments and automatic contributions. But I've also never had a credit card in my life, and getting one just to establish good credit seems so weird that I don't even really know where to start.

Honestly, a lot of my "financial literacy" is that I still think of myself as poor, and so try to avoid (in general) spending money on anything ever, especially because I'm terrified that everything could collapse (job, health, whatever) and I will have to start over again.
posted by klangklangston at 12:22 PM on January 16 [1 favorite]


Thoughtcrime: "Privileged kids don't care or need to know anything about financial literacy, sure."

Steely-eyed Missile Man: If you have no assets with which to be financially literate, then the education does you no good. As for learning it on your own, it's pretty clear that doesn't happen generally. Your personal experience is not generalizable to everyone.

Whoa - way off base. "Financial literacy" includes balancing a checkbook, planning for bills, buying clothes and groceries within a budget - all things that even most poor people have to deal with (until they flunk their checkbooks and the bank takes it away).

The poor do most certainly have assets, except for the most pitiful of the homeless.
posted by IAmBroom at 1:05 PM on January 16 [2 favorites]


My point is that kids don't have assets. They will learn these things and then probably forget, which is the point the post is trying to make. We teach this stuff too early. Even college may be too early, but that's the last time most people can be forced to take a class absent a conviction for something.
posted by Steely-eyed Missile Man at 1:28 PM on January 16




Steely-eyed Missile Man: "My point is that kids don't have assets. They will learn these things and then probably forget, which is the point the post is trying to make. We teach this stuff too early. Even college may be too early, but that's the last time most people can be forced to take a class absent a conviction for something."

The problem with this is that not everyone goes to college, so any message you want to reach EVERYONE (or substantially everyone) has to be given before high school is over -- which is why, even if no kids ever had sex before they turned 18, high school would still be the right time to teach sex ed. Of course this doesn't solve the problem where you're teaching a 16-year-old about mortgages and installment contracts, neither of which they can legally enter for two more years and which they're unlikely to enter for another 10 and by then they'll have forgotten ... which is why you need some sort of community extension financial education (as well as better regulation on retail financial products, IMO).

What we have had some luck with, anecdotally, in our local schools' consumer ed program is steering teenagers (and sometimes their parents) away from payday lenders and check-into-cash places, and towards local credit unions (mostly) that offer no-minimum accounts and then you can cash checks. Also some luck with smarter car buying in the low-end used car market. We get a LOT of uptake on what we teach them about FAFSAs, but that part of the class is always supplemented by trainings in the evening for parents about paying for college.

Not so much luck that the check-into-cash places are closing or anything, but we do get some kids who understand why it's worth the extra hassle to go to a credit union branch even if it's less convenient than the payday lender, and they start cashing their part-time-job checks there. That's a little victory, but a hopeful one.

We also know that some immigrant parents, from reading their kids' school material, end up much more conversant with what's available to them in US retail banking, although they have to be functionally literate in English for that to happen. (Those are obviously pretty motivated adults in general, who are typically already functioning at least okay in the American economy, but sometimes you don't know what you don't know, so you don't know what to ask or research.)
posted by Eyebrows McGee at 2:26 PM on January 16 [2 favorites]




I think maybe the way to teach financial literacy is through basic math classes.

"You have a credit card that carries X% interest. You can afford to pay $Y per month. What does your financial situation look like after twelve months?"
posted by feckless fecal fear mongering at 3:27 PM on January 16


I guess the problem with financial literacy, and this comes up on the green when people talk about meeting a financial planner and get told that's for people who have money, is that when you don't make enough to cover your bills yet you make too much (or are otherwise disqualified) to qualify for assistance of some sort, budgeting doesn't mean a damn thing. You are playing a constant game of catch up, keep your head above water, don't get evicted, keep yourself fed, your car fixed so you can get to work, etc.

Heck, that was my life for quite a long time. Thank god i was fortunate my birth control never failed and i didn't also have a child to provide for.

I know way too many people who live just a little above paycheck to paycheck yet have education and skills. They aren't in debt because they spent too much on a car or a house or maxed out their credit card buying stuff at ikea.

They're in debt due to one illness, one car accident where the other party didn't have enough coverage and their own ins co wasn't helpful.

I'm not sure where financial literacy will help any of that.

I only say this because i feel that a lot of proponents of financial literacy, and i used to be one, miss the point. Financial literacy is for people with with enough money to pay their bills and have some to save and perhaps a little discretionary.
posted by sio42 at 3:41 PM on January 16 [4 favorites]


"They never pay the slaves enough so they can get free, just enough so they can stay alive and come back to work."
-Charles Bukowski
posted by Pirate-Bartender-Zombie-Monkey at 12:20 AM on January 17


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