Should financial literacy be mandatory?
Before this whole economy began to rot, we’d never heard of terms like “futures markets,” “cost of debt ratio” and “net present value.” They were part of a vernacular reserved for derided Wall Street traders, and that’s where they ought to stay.
But if there’s to be one lasting casualty from the latest recession, it’s that the world – Canadians included – could greatly benefit from a lesson in Economics 101.
I stumbled across this interesting Op-Ed piece from the New Yorker’s James Surowiecki recently, and he agrees … with an interesting take on a possible fix.
Surowiecki argues that North Americans should benefit from a kind of money literacy program, “something more like a financial equivalent of drivers’ ed.”
“There’s evidence that just improving basic calculating skills and inculcating a few key concepts could make a significant difference (in the way people handle their money),” he writes on the New Yorker website.
Indeed, Surowiecki may be right. It’s not that we all need to turn into Gordon Gekko to promote wiser fiscal health, but requiring society to have a rudimentary understanding of base financial principles could be quite valuable.
It’s an interesting proposal, adopting a kind of financial “drivers’ ed,” as the writer puts it. But your average Tom, Dick and Harry isn’t likely to opt into one of these programs if it’s optional to the general public.
No, if we’re to consider a crash course on money, we’d have to make it mandatory – and why not start with high school kids?
As teens reach ninth or tenth grade, make an economics class – something optional to today’s high schoolers – a requisite course needed to graduate.
According to many experts, regions of the U.S. with mandated financial education in their high schools has a significant impact on local savings rates.
And, as Surowiecki concludes, “the difference between knowing a little about your finances (the base principles of mortgage and interest rates, for example) and knowing nothing can amount to hundreds of thousands of dollars over a lifetime.
“As the past ten years have shown us, the cost to society can be far greater than that.”
By Jason Buckland, MSN Money