Did you know that just about 1/3rd of all high schools in the U.S. now teach the Dave Ramsey curriculum Foundations in Personal Finance? It’s a high school curriculum that teaches basic financial principles such as budgeting, staying away from debt, and saving for the future (investing basics).
First of all, I think that this is awesome. When I was in high school, I had “Economics 101” which taught me a few things, but I mainly concerned with passing the tests to get my A and moving on. It didn’t excite me about personal finance or investing. That didn’t happen until I was in college. I vaguely remember learning some of the basic concepts such as supply and demand, and maybe a little bit of history about some of the major financial events that have happened since America was founded. Nothing seemed very relevant to my personal life.
If I was in high school now, I’d definitely appreciate it if my teachers and administrators pushed for the Foundations of Personal Finance curriculum. I’m not saying it would be extremely entertaining from the perspective of a 16 year old kid, but it probably wouldn’t be so dry as those presentations and textbooks I had to look through in Econ.
So, what are the implications of this class being taught to millions of high school students around the country? Will we slowly become a generation of savers, investors, and debt-shunners?
Unfortunately, I don’t think it works like that. While I do believe that, overall, the country will have a greater level of financial literacy – or at least awareness – because of Dave’s teaching materials, it would be foolish of me to think that every other teenager in America is going to latch onto the “avoid debt” bandwagon.
There will still be credit card companies pushing the idea that FICO scores are a necessity – that you should build it up so you can borrow money for a starter home at some point, and then you should keep it up so you can borrow even more for a bigger home later. There are still flashy car commercials, banks that advertise for low-rate loans, and streets full of bars with unbelievable happy hour deals ($7 for a pitcher? Sign me up!)
You can lead a horse to water but you can’t make it drink, as Mrs. Mase told me. The problem with financial literacy efforts in this country is not just that people don’t know information – we live in the most information-dense period in history. It is also the fact that people must have a real, emotional incentive to take positive action.
Information definitely comes first though, and for that, I applaud Dave Ramsey and his team for being so successful with their program. Even just a few years ago, many high schools did not have basic personal finance classes. Now, the barrier to the information part of the equation has been lowered. We just have to get people to actually do the things that they are learning.
One of the unfortunate things about the whole situation of personal finance in America is that, in aggregate, we’re a complete mess. If most Americans were relatively responsible with their financial affairs, Dave Ramsey wouldn’t be in business. The majority (well, maybe around 50%) of the calls on his radio show are from people who are on Baby Step 2 in his program. That’s the one where you’ve got $1,000 set aside already for emergencies, and you’re working and pushing as much as you can to pay off all of your consumer debt. Really, there aren’t too many calls for Baby Steps 3, 4, 5, 6, or 7. Once you make it to Step 3, you’ve pretty much got yourself together and are no longer on super shaky ground. The sad thing is, most people are not even in that stage. Look at our average savings rate right now compared to other countries of similar GDP:
4.9% right now. It could be worse, but we could do a lot better America. I’m quite impressed by the Swiss – almost 18% on average is something to be proud of. Heck, Hungarians save more than us, and their GDP per capita is way lower.
When it comes down to it, we’ve got some work to do. Budgets need to be made and savings accounts need to be opened. I’m definitely grateful for Dave Ramsey’s high school curriculum, bringing the knowledge to the young-ins. That’s only one piece of the puzzle though. There has to be greater awareness of how controlling one’s finances can really change our lives for the better. That’s why I’m so excited about the early retirement/financial independence movement that’s been going on on-line for some time now. People are making radical changes in their lives and sharing it with the world.
Hopefully the journey I’m sharing here will add a little bit more to that inspiration 🙂