High School Students Getting Trapped in a Generation of Financial Mistakes

Photo courtesy of powerbooktrance

The following guest post is from Mike Young, Founder and CEO of The S.E.C.U.R.E. TM student program. 

The media today is focused on the $700 Billion bailout on Wall Street and the credit crunch.  However, what has become very clear in the eyes of many is that the real problem is with the foundation of our educational system.

Remember all of the neat stuff you learned in high school about credit and money?  If you are like me, you don’t, because there was no education on how credit and money actually worked.  The average kid today will see over 360,000 advertisements before the age of 18 while receiving less than 10 hours of formal education on financial literacy.

CNBC reported that the real problem with the adult population today, is they were never taught this stuff in school.  This leads us to an entire generation of consumers with a -2% savings rate.  The average American has less than $3800 in savings and an average credit card balance of $9,200!

Marketing and advertising has been working full steam ahead since the 1950’s and it’s about time that our educational system begins to make sweeping changes to help high school kids develop positive habits with credit and money before they leave home.

It’s time for our society to begin making an impact on the next generation, teaching them lessons we’ve learned the hard way.  It’s time to make a difference and consume less while saving more.  We can turn this ship around, but it’s going to take a group effort at the community level and begin getting involved now.

Frugal Dad’s Thoughts:  I couldn’t agree more with Mike’s message, and his organization’s mission.  As a society, we do a poor job at preparing our youth to take the next step to become fiscally responsible citizens.  Think about it–we spend countless hours of instruction preparing students for fitness through health classes, gym and physical education.  We spend many more hours teaching students proper grammar, in both English and foreign languages.  Rather than teaching them how to take tests, or prepare for college, perhaps we should focus our efforts on preparing students for life.  Some basic courses in personal finance including lessons such as how to balance a checkbook, how to manage credit, how taxes work, etc. would go a long way towards creating a better prepared group of high school graduates.


  1. The conspiracy theorist in me wonders if banks and other financial companies don’t have politicians’ ears on this one. They obviously don’t want this type of thing to be taught in school—it would make it common sense that paying 15% interest on your credit card makes you a “sucker.” And if some kind of shady, behind-the-scenes payoff isn’t happening in the background somewhere, why hasn’t this stuff been taught yet? What’s the hold up?

  2. Such a great post! Building positive habits with credit and money should surely be a priority when it comes to the younger population. Consider this story Twittered!

  3. I couldn’t agree more. I wrote a post on my blog yesterday about how unprepared I was right out of high school, living on credit with only a part time job. Most young people my age don’t realize what kind of damage they are doing by being so careless. We were never taught the fundamentals of money or credit in high school, and coming from parents who aren’t very good with money made it hard to find advice on how to turn things around.

  4. Financial responsibility needs to be taught at home. The easiest way – lead by example! that’s 80% of the battle right there. My daughter always thought I was using a credit card – when I was actually using my debit card. It was great opportunity to teach her the difference. She is only 8 – start early! Believe me – highschool is too late. Kids develop habits early.

  5. My entire highschool econics class consisted of reading old copies of mother earth news and writing reports. (alternative HIGH school) anyhow–what’s funny is I learned alot from those. One thing I have never been into is wasting $$on expensive junk. I do have a nice laptop though. 😉

  6. I still hear about the kids of friends thinking that writing a cheque = magic money.

    I always use cash in front of my daughter, she’s only three but she completely gets the difference between having money of your own and being able to spend it and not spending anything when your own money runs out.

    Kids should definitely be taught something about this in schools, although I agree a lot can be done from home. Unfortunately even here in the UK it isn’t taught in schools either.

  7. We spend hours on phys. ed., yet our kids are still obese. We spend ‘tons’ of time teaching our kid grammar and foreign languages, yet they do not know a noun from an adverb and what the subjunctive is. Just because you ace the SAT/AC doesn’t mean you can think your way out of a damp paper bag. You can teach them financial basics, but if they don’t see some continuity in the home and in their lives, it will all go out the window.

  8. I am surprised people even save 2%. With my own kids I emphasize consuming less, reusing, buying second hand…making do with what is already out there..frugal luxuries. We also try to help them see that working hard to have money saved is a much better long term goal then working hard to immediately spend on luxuries and toys. What was important when you were 18 will not be important at all most likely when you are 30.

  9. Education is needed – yes- but I would want to closely scrutinize the content of a program like this. As far as we know, it could have been designed by folks in the credit card industry who have an entirely different concept of “responsible” use of credit. Too many “education” programs talk about how to work the consumer credit system and not enough about how to avoid it.

  10. When I tutor, I always make sure to gambling-proof and credit-proof my students. I find a twelve-year-old can grasp probability well enough to work out the odds on a game of blackjack, craps, VLTs, or roulette. This leads into a frank discussion of gambling and why people do it. The student almost always decides gambling is a tax on people who can’t do math.

    Another thing I do is introduce compound interest. The student uses an imaginary credit card to pretend to buy something. I create a “statement” complete with interest. We calculate how long it takes to pay the item off making the minimum payments, and the student generally ends up very suspicious of credit cards and debt. This leads into a discussion of advertising, and the student concludes that people who pitch credit cards are financial predators.

    I also flip that lesson and talk about compound interest in a savings account. That’s more popular because everyone likes passive income.

    A third important lesson is on the distance of money. I’m sneaky about it and work it into a lesson on measurement. We measure the thickness of a dime, calculate how many dimes it would take to pay for a $100,000 house, and then figure out how long the distance would be if those dimes were rolled and stacked end to end (it works out to about one and a quarter kilometers). Then we go for a walk for that precise distance and I invite the student to look back at how far we walked and think very carefully about how hard it is to get a house and how much of that amount can or should be borrowed. The student, who associates a home with security, ends up with an intense desire to own a house mortgage-free.

    I never married and have no children of my own, but I gambling-proof and debt-proof as many other people’s kids as I can get my hands on.

  11. Thank you MtoNY. I was thinking this exact thing when I was reading the article.

    Having graduated high school in the last 12 years and spending 5 years in college, I can say first hand that no amount of education can fix what people don’t want to learn.

    My fellow classmates and I were educated on everything from sex to drug use, health issues and current affairs. As adults now, they are still overweight, use drugs quite often and know almost nothing about how the US government works and what causes shifts in the economy. They were also having all kinds of unprotected sex (from what I heard) even though they may have taken a sex-ed class earlier that day. (All it takes is a Friday-night drinking party.) Those who want to know or can learn from their mistakes are the only ones that can benefit from education or self-learning. Everyone else just considers it wasted time.

    Don’t get me wrong, I think that education is a good thing. Just don’t expect it to be the silver bullet solution to all our bad spending habits.

  12. I guess I am the anomly here.

    I actually had a class in high school called “life-skills” that I think was perhaps the best course I had in high school. I was actually taught, in classroom, how to type, balance a checkbook and figure out what you’re actually paying for that credit card. It still amazes me that I make my living off of a skill that I learned in high school (typing).
    Now if only I’d never gone to college or even heard about student loans…

  13. I don’t expect teaching financial concepts in a formal setting to solve all our fiscal problems, but it is a start. And considering virtually nothing is being taught in our schools about financial responsibility it is up to us as parents to 1)teach our own kids, and 2)demand more practical cirriculum from our school systems. There are a lot of kids graduating high school who can solve quadratic equations, but can’t balance their own checkbook.

  14. I don’t think that they CANNOT balance their checkbook, it’s that they don’t want to. Even relatively uneducated people can balance a checkbook, so I don’t think education would make people do something they don’t want to do anyway. Balancing a checkbook is basically just taking a number X and adding/subtracting numbers until you get to your current final value Y. Not hard, just tedious and eye-opening.

    I’ll just reiterate the point that we’ve had health education in our schools for over 25 years now. We have also had a significant increase in child and adult obesity in the US. We want to sue companies for their trans-fat use and legislate healthier alternatives because people cannot be responsible for themselves. It will be the same thing with debt and savings. We’ve already seen that with people not being able to handle the mortgages they took out and their use of credit cards to finance their lifestyle. It’s not that running the numbers to determine what you can afford is difficult — it’s just that people don’t want to do it. It is someone else’s problem.

  15. I am in the camp of “You can’t teach what they do not want to learn”. Take two of my children as an example. Daughter #1 is now 18. She goes to the local Junior College and works at a local restaurant. After taxes she makes ~$1,500/ mo. She lives at home and has absolutely no expenses other then gas and insurance on her car. Last week she came to me asking for $5 because she had no money and not enough gas to get to work! But she of course will not listen when we try to talk to her about responsible spending and savings etc. Now daughter #2 is 15 and needs a homecomming dress. She is too young for a job so I give her money to go shopping. She came home with a dress, shoes, & CHANGE! 🙂 And she was proud of herself because she picked up a booklett at the front of the store that had a $15 off coupon in it. That’s my girl!
    Anyway, my point is, two children from the same family, being shown the same example from my husband and me, two totally different outcomes. Some people just need to learn the hard way.

  16. I was required to take a myriad of classes in high school, but not a single one of them was having to do anything with money or finances. I did opt to take a year of accounting, but that didn’t even really touch on personal finance. I mostly remember that we just did some reading on our own, did the assignment at the end of the chapter, and then the teacher didn’t care if we went to sleep afterwards. I spent all year getting a little nap during fifth period each day.

    What a shame! I wish someone had taught me about personal finance at some point. Perhaps it would have saved us from bankruptcy eight years ago. Augh!

  17. @DavidK: You hit the nail on the head. Our school system had a Personal Life Skills class in 8th or 9th grade for those who hadn’t figured out how to balance a budget or a check book. Yet it didn’t change what students actually did once they graduated.

    A few hours in the classroom, or the ongoing exposure to responsible decision-making by parents, is *nothing* compared to the impact of mass media. We’ve got TV shows featuring young Beverly Hills teens and twenty-somethings with no jobs and no responsibilities but enough $ to charter a jet for a weekend island vacation. We’ve got Net and newpspaper coverage of surgically altered starlets and wealthy heiresses who have nothing to do but go to parties and act stupid. We’ve got story lines about New York twenty-somethings who, having recently graduated from college and obtained entry-level jobs in fashion or journalism, can somehow afford designer clothes and gigantic loft apartments. Legal or medical shows depict very young professionals as living a life of luxury when, in real life, new lawyers and doctors make barely enough to get by while paying the interest on crippling debt.

  18. Having thought about this a little while longer and reading Squeaky’s comment, I think I can see what may be an underlying cause.


    Though we would like to pass the buck and blame education or the mass media or even the parents, it boils down to how much personal responsibility a person has. Both to themselves and to others. Though external stimuli may help to leave our sense of personal responsibility behind, it is still ultimately up to us. I can cite myself as an example — I watch plenty of TV, but I do not feel as if I can shed my own sense of personal responsibility simply because I see people on TV do it.

    You cannot force personal responsibility upon someone. You may try to teach them that being responsible is a good thing, but almost anything that happens in life and in their heads may up-end that apple cart of teachings. Personal responsibility cannot even be legislated. We make murder a crime but people still commit murder every day.

    What we can do is to limit one’s amount of personal responsibility so that they do not affect too many others outside of themselves. I’ll leave it up to you to determine what that may mean to you.

  19. I agree to a certain extent with this post. It is important for kids to learn the basics of personal finance, and school is the perfect place.

    However I too think the bulk of the responsibility lies with parents to set good examples and boundaries in order for their children to learn every day the impact of spending and saving. And therein lies the dilemma – so many parents have no idea how to do this as they either never learnt themselves or simply aren’t interested.

    With the world portrayed through the entertainment media as (for the most part) wealthy, beautiful and able to “have it now” it’s an uphill battle to get adults to put the plastic back in their pockets. let alone the kids. One way I’m battling this is to switch off the TV, however I fear I’m in the minority…

  20. @DavidK: I agree with you that is boils down to personal responsibility, but I’m not trying to “pass the buck” by calling for improved financial education in schools. We teach kids crack cocaine is harmful, but some still elect to try it. Does that mean we should stop teaching kids that crack is bad for them?

    Squeaky’s comments regarding the poor financial role models kids have to look up to is dead on. Unfortunately, some of those poor examples are also their parents. Perhaps the work of an inspiring teacher or mentor could help kids avoid some of the financial pitfalls waiting for them beyond school.

  21. Let’s hit a middle ground here:

    I will agree that we do need more personal finance education taught in school.

    While we do need to teach it, I do not think that teaching it ad-nauseum will make much change in people’s personal spending and borrowing habits. I can speak from experience here where at the high school I attended, so much money and time was poured into D.A.R.E. functions at school that it really detracted from more practical things that I could have been learning. At least once a month for 1.5 hours in the gym we had to do a DARE meeting thing. Total nonsense. Let’s spend that money somewhere a little more applicable and cut back on the self-serving “look at what a good job we’re doing” junk. Of course, to attend this function, I had to miss my computer skills class. Rather, in the period before the function, I was attending gym where I learned all about how to smoke weed, what a “bong” was and from whom I could “score” weed. Wow, D.A.R.E. was really working in my school.

    Let’s not look at education as the answer. It is a very small part of the puzzle.

    I’ll counter your argument, FrugalDad, with a hypothetical situation — I’ll assume that neither you or your wife smoke, but what would happen if your teenager or young adult child took up smoking? Who would be to blame there? The school (they aren’t taught to smoke in school and we’re not talking about peer pressure here — just education), mass media (no smoking adverts are allowed to be seen on TV, newspapers, or even certain magazines now), or maybe, just maybe, it could just be the kid’s own fault?

  22. They still teach Personal Finance in Oregon – however it is an ELECTIVE and not a requirement. There was once a time when it was a requirement for graduation – I think it important enought that it still needs to be – at least a mini course on it.

    Another class that is missing is PAD – or Problems in American Democracy… Now that was an eye-opener about almost 40 years ago in High School – how we are to look for the bias in reporting and such… and how to spot lies, etc…as well as explaining the whole political system, and comparing it to other countries. It was a very good class.

  23. There are lots of things we’ve entrusted to the Feds, but they always screw them up. I’m not sure I’d trust the government to teach anything about personal finance either. These are the same guys that bounced hundreds of thousands of dollars in checks at the House bank a few years back, remember?

    We have a bunch of politicians that cannot even manage their PERSONAL finances in charge of trillions of dollars and they have taken this country into almost $10 trillion in total federal debt…now, they want more, and they want US to pay for it. We have no choice if we want to stay out of the slammer.

    We should replace every single one of our politicians. But this country is made up of a bunch of people who don’t even know the name of the Vice President. They know who won American Idol. They know who was on Oprah last week. They know what song is on top of the charts, but they have no idea about anything that really means something … like economics or finance.

    We’re in deep trouble long term, I’m afraid. The best thing we can do is teach our children by example. I’m pretty certain I don’t want some government bureaucrat or NEA member teaching my kids about money!

  24. As a father of 5, I totally agree with you. And I cannot comprehend why our educators and the so called leaders we have elected cannot see this.

    School is still filled with teaching stuff that can never ever be of any use except maybe to a very very few. (I studied Physics and nothing that I learnt seems to be of use in daily life)

    So its up to us parents to fill this gap.

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