Why Isn’t There Universal Personal Financial Education?

It’s occurred to me that despite the idea coming up several times by various people over the years, there never has been a serious attempt to get personal finance as part of the basic high school curriculum in every school in North America. Why is that? Then it hit me. Perhaps the better question is who has an interest it in not happening?

After that question rolled into my head I started to give the matter some serious thought. Then it occurred to me what would happen if everyone knew about personal finance and most of them followed it. There is a huge number of companies that would out billions of dollars in easy money.

No more just signing their mortgage renewal forms from the bank, people would actually negotiate their rate. Then they would insist on free banking and high interest chequing accounts. Before you know it the poor bank wouldn’t be able to keep having record profits year after year. Then think about all those poor mutual fund salesmen, we won’t buy a fund with a MER over 1%. Then the insurance companies couldn’t sell us too much insurance for things we don’t need. Most of us would be living in our means so the big screen TV manufactures and the SUV producers would lose millions in sales. Then worst of all the poor credit card companies would have almost no interest charges and the pay day loan industry would vanish.

To put it bluntly there are a whole lot of people who are making a living off of everyone’s stupidity: including me and you. You don’t believe me? Then please show me which mutual funds that you own that don’t actually have a single bank, insurance or financial service stock as part of their mix. Even if you manage to pass that one, you are telling me you don’t own any energy stocks which benefit from North America’s addiction to oil? So let’s face it. We the smart people that understand just a little bit of personal finance are making a killing off the stupidity of everyone else.

Are you feeling guilty yet? Because I’m not. The reality is there is more than enough tools out there to get educated if you have even the slightest interest. The only reason people are dumb is they have chosen to be that way. If you don’t believe try a few Google searches like “save money” which gives you 2.91 million websites while “personal finance” gives you 13.6 million websites. The fact you’re even reading this post proves you managed to do it, so why can’t your neighbor? Because they chose not to. Whether the choice is conscious or not would be an interesting psychological debate, but in the end we need stupid people to make money off of so you and I are the reason there is no universal financial education.

This post is now part of the 126th edition of the carnival of personal finance.

10 thoughts on “Why Isn’t There Universal Personal Financial Education?”

  1. I lived in an extremely wealthy, old money town in the States for a while and a lot of the teenagers there took finance & investment classes at the library in the summers. Their parents were very cognizant of the money these kids would be seeing in their lives and there was a huge market for the classes.

    I bet similar classes would be popular in a lot of communities – maybe something you can teach in your local library when you retire at 45!

  2. I completely disagree with your conclusion that we need stupid people to make money off of. Even smart people still need oil, insurance and financial services.

    If you understand that the sole purpose of school is to prepare you for a job then it becomes easy to understand why personal finance isn’t part of education. I’ve never seen any jobs advertised with the requirement that you be good at personal finance. Hell, even some financial advisors are probably horrible with their own finances.

    There’s no conspiracy. Personal finance isn’t taught in school because it won’t help you get a job. It’s the same reason why entrepreneurship isn’t taught.

    Having said that, I’m in favour of a complete education overhaul to teach these subjects to students. It’d be great to have an education system which teaches you about the world and generalized subjects in addition to specialized skills.

  3. I am in an education program right now at the University of Prince Edward Island and I am planning to have an extracurricular activity during my practicum teaching centered on personal finance education. If successful and when I become a full time teacher, I am going to push for more of it to be taught in the curriculum (they do see some material in some math courses). I will push for a full course in the topic. I’ll let you know how it goes.

  4. I remember taking an Introduction to Business class in Grade 10. It covered everything from mutual funds to car purchases and mortgages to the stock market and everything in between. We had this thick textbook that was ‘donated’ by the local Scotiabank branch. It was by far the most useful course I took in high school. Another teacher made us read a book called “Don’t Wait to Buy a House, Buy a House and Wait” for his class. I guess I was lucky to have at least a few teachers who cared about passing their PF knowledge to us. Hopefully John Gallant will do his part for future generations…

    I totally agree that there is no incentive for the government to institute a mandatory course in personal finance.

  5. White Eagle, I think that class was offered too at my high school. It was either that or a typing class. For some reason, my family wanted me to take typing so I could complete assignments faster. Their reasoning was that it was more practical (?) Little did they know I perfected my typing not in that class but later by “chatting”.

    However, maybe I learned from my family through osmosis as I am pretty responsible with money.

  6. Guiness,

    Now that’s an idea. All I have to do is write the textbook first. *grin*

    Matt,

    I don’t disagree that we all make money off each other, we just make more off the stupid people.

    I do have to disagree with you about the purpose of school is to prepare you for a job. But I’ll save everyone the very long story on why.

    John,

    Best of luck with that. I would love to hear how things turn out for you.

    White Eagle,

    Well that’s good to hear you had a class on it and some of your teacher’s cared. I didn’t get anything until my third year at university in my Engineering Economics class. I guess better late than never.

    Mariam,

    Parents teaching their kids is by far the best way to give personal finance education. The issue of course is you need the parents to have the knowledge in the first place.

    Thanks for the feedback everyone. This has been interesting.

    Tim

  7. You’re right about there being a lot of people profiting from the ignorance of others. However, I don’t think it’s a matter of willful ignorance. I think it’s often a matter of “you don’t know what you don’t know”.

    The USA’s mortgage crisis underscores the need for more universal financial education. In a world economy, decisions made in ignorance can have a ripple effect that spread well beyond the country of origin.

  8. When I was in grade 10 (in B.C.) there was a required class called Business Ed. I remember we had to plan how we would furnish our first apartment and things like that. Nobody took it very seriously.

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