Financial Education in the United States

financial-education-usa

The American public education system really is a product of the 19th century. It was a period of transition from a largely agrarian society to an industrial one. This transition was not easy; in fact it was quite painful to live through — entire communities lost their way of life due to the rapid pace of industrialization.

It was largely in this context — that of farmers at an educational deficit in a new industrialized economy — that the American education system was born. Its purpose was simple: giving children enough of an education to be able to read, write, and do the moderately complex arithmetic required to function well in an industrial age. That was all that was really required to operate and troubleshoot factory equipment.

Common then but unthinkable now: many children, especially girls, did not progress beyond the 8th grade. At the time, it was entirely possible to function, and function well, in society with this level of education.

Today America is hamstrung by this model. Now, a High School education in and of itself isn’t a milestone that adds to the value of one’s resume. Once you graduate, you don’t have the skills required to get a job. Hell, unless you bring other skills to the table, you can’t dig ditches in some parts of this country without a college degree.

There are lots of places where this deficiency shows up, and I could go on at length about several of them. But the lack of general financial literacy is a major problem.

When I was in middle school, I remember perhaps one session covering the basics of having a budget. Interest rates weren’t covered, just household budgeting and a few other related odds and ends.

In high school, one year I had a half-year class devoted to economics, which I enjoyed. But it was mostly about simplified economic models — banking was conspicuously absent from the course material. Some economic forces were covered, such as supply and demand, but the underlying economic theories of Mesis and Keynes were entirely absent.

This is bad treatment of economics as a subject, and even worse treatment of personal finance, which was barely touched upon. Being well aware that things may have changed since I was in high school, I asked around among friends with high school-aged children and, although some of them were indeed required to take a personal finance course in high school, I was unimpressed.

As it turns out, this is not a local phenomenon: It turns out many US schools get a “failing grade” in personal finance.

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