In a world where everyday people can’t balance a checkbook or name our Vice President, financial literacy should be a larger issue regarding this upcoming national election. The future of our country is at stake. While our media hurries to cover the next outlandish tweet, traditional education is behind the curve. There are so many reasons why financial literacy matters today. Marriage, college, and national elections are the most crucial. It matters as much for our personal interests, as well as our national.
In a recent CNBC article, money is the leading cause of stress in a relationship. How many marriages/divorces would have been avoided if we knew just a little bit more about money or credit scores? Recently, I had a tax client approach me regarding his wife’s looming debt problem. Apparently, she had LOADS of debt. My client was concerned about filing a join tax return with his wife for fear of being responsible for this debt. Little did he know, his decision to marry made him just as responsible as she is for it. This is a simple case of ignorance, which could have easily been avoided.
Our country itself is dealing with an out of control debt problem. At the time of this writing, we are heading closer to $20 trillion of national debt, not to mention our even more concerning $544 billion Federal Deficit. Would we have made better choices in the ballot booth if we were a bit more financially literate? I would contend that we would understand the promises our politicians make to us and how realistic they are on a much deeper level. Whether that be building a wall or fighting our enemies, money matters.
Going to college is an investment and should be evaluated as one. Return on Investment and timing are two important aspects of investment analysis. Both should be considered in schooling choices. While 4 years of getting away from living at home and partying recklessly (not judging) sound amazing, is it worth $160,000 worth of debt with a degree whose post-graduation demand was not considered? College has become the status quo and there is a certain stigma to those who do not attend. While there are technical skills in demand that don’t demand a degree, as well as many other choices, this stigma has to stop.
At least the beginning of the solution to these problems must include supplementing traditional education. Though public and private school curriculums have added a touch of finance, it’s not nearly as in depth as it should be. Compound interest and budgeting are great topics to cover but this can all be covered relatively quickly. Our 8th graders should be able to complete a basic tax return and understand how financial statements work (Business, Personal, and Governmental). Since most schools are not up to par, teachers should leverage technology. Khan Academy, Udemy, our upcoming products, and countless YouTube videos can get our kids where they need to be. This will produce better employees, entrepreneurs, and spouses for that matter.
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Though, I’ve outlined several fixes, look out for upcoming posts regarding more elaborate solutions.
Whether it be skills or knowledge, an investment in yourself is the best one you can make. Invest time in educating yourself about money and you will be more clear about decisions your life will bring. Mental clarity can be learned through obtaining knowledge. Financial literacy can be a start toward this goal.