Comments on: High School Seniors Get ‘F’ in Finance

By: nofearingthemoney

nofearingthemoney — Tue, 15 Apr 2008 18:05:44 +0000

Thanks for the link. I took a look. The Clearinghouse looks useful. I also read the press release from the organization about the 2008 survey. That was very interesting as well. I do have some disagreement with them on the definition of what constitutes “basic” financial literacy. At 18 years old, I was in charge of my finances (paying for college, managing my living expenses, and essentially responsible for myself) and there were questions that I would not have known the answer to at the time. For example, I did not own a car, so would not have known the answer to the collision question. I did not need to know in order to live my life at the time. Interestingly, the press release did go on to say that college age kids scored progressively better than high school seniors (which reinforces the point I think many here were making).

While I don’t think they were trying to tell young people that they are stupid, by highlighting questions that many people would not need to know until later in life (or at least until later in college), makes the subject daunting and seemingly much more complicated than it has to be for those just starting their adult lives.

In addition, one thing the press release highlighted is that problem-solving ability seemed to contribute to higher scores on the test. Not being able to figure out how long it will take to reach a savings goal could be a math literacy problem, not a financial literacy problem. Personally, I find that possibility much more disturbing.

By: Tamieka

Tamieka — Tue, 15 Apr 2008 16:34:07 +0000

–Sorry, I put this in the wrong section before.

Single Ma,

I think the idea is that the financially ignorant 18 year olds of today will be the first time homeowners of tomorrow (well really 5-10 years from now). So these people who bought homes they can’t afford were probably the same people doing poorly on the financial savvy quiz 10 years ago. Which means, this problem will only get worse if lenders don’t become more responsible.

Just a thoguht.

By: Sasha

Sasha — Tue, 15 Apr 2008 16:32:06 +0000

I agree with you Single Ma. Age appropriateness is the key here. Illinois had a “consumer economics” requirement when I was in high school, but it was just one quarter of learning how to balance a checkbook. Literally, we had fake checkbooks and we would add and subtract bills and that was our homework. I learned addition/subtraction in first grade – that class taught me nothing! I think HS students need to know three things – how credit cards work and why they should avoid them or be very careful with them, how loans in general work and the differences between subsidized, unsubsidized and private loans for students, and how credit scores affect finances and why it is important to have a good one.

By: HC

HC — Tue, 15 Apr 2008 15:29:02 +0000

I highly recommend that everyone take a look at the Jump$tart survey and answers directly, because I think many of these questions ARE quite basic.

When 40% of kids can’t figure out how long it would take a new worker to save $600 given a basic budget, 60% can’t identify collision as the coverage needed for at-fault damage to one’s own car, and 60% can’t identify the risk of their parents losing family health insurance coverage if the parents become unemployed, there are fundamental gaps in many young people’s financial understanding. (Also, I think that since most credit card agreements also include a clause allowing the card issuer to change terms at any time [albeit with notice], kids would be better off knowing the law rather than their own issuer’s initial agreement.)

It’s not a question of knowing the details about investments. It’s about not knowing a lot at all. And I think an organization that devotes its time to giving educators and students tools to FIX that problem deserves applause more than criticism.

http://www.jumpstart.org/fileindex.cfm

Great points.

However, I was criticizing an article that served no other purpose than to highlight what students do NOT know. We thought your child was behind the curve, now we’ve confirmed s/he is more stupid than we thought. Please! What’s the point? If an organization is proposing a way to FIX the problem AND providing the tools to do it, then you’re right, that IS great and should be commended.

Thanks for link. I need to explore the site and dig deeper. I might learn something new myself. [-SM]

By: L@SpillingBuckets

L@SpillingBuckets — Tue, 15 Apr 2008 11:51:42 +0000

“Understanding stocks and bonds has nothing to do with being financially responsible. One must crawl before they walk, and walk before they run, but it doesn’t mean you MUST complete a marathon. Some things are learned through life experience. [-SM]”

I agree that understanding stocks and bonds doesn’t make you financially responsible. Understanding credit cards, and loans, and how money itself works, does. (the “walking” step) And they still don’t teach ANYTHING personal finance related in highschool. I didn’t have a single class even offered to help with that, no accounting, no personal finance, nothing. If it weren’t for my mother I would have been clueless, sucked into the credit card debt and scams that so many others are. (I wouldn’t have learned to crawl) I got lucky and had helpful responsible parents.

Agree about the crawl/walk/marathon analogy.