- Reaction score
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- Points
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I have always thought we should teach recruits about personal money matters. This article does a good job of telling the story.
http://www.thestar.com/printArticle/273650
Teaching kids about money should become mandatory
TheStar.com
Start with the basics of budgeting and cost accounting, the teach about interest and debt
November 04, 2007
David Cruise
Alison Griffiths
Special to the star
It's ironic, while the federal government trumpets record surpluses year after year, the citizens of this country sink further and further into debt without savings or investments to backstop them. (For a snapshot of just how far things have gone, see "How bad?" below.)
What can we do to avoid our nation becoming Planet Debt?
This is a vital question to us. Though we write primarily about investing, debt determines if an individual will save and invest. If we don't save and then invest, the economic fibre of our country weakens. So what to do? Start with the kids, in our view.
We should immediately establish a mandatory series of high school courses centred on money. After all what's the point of going out into the work force or on to college or university if you don't understand and can't manage your money.
Early on in the money curriculum students would keep a register of all their incomes and expenditures. What's important here is not the amount of money involved but how it is spent.
Kids will be amazed to discover simple facts like 70 per cent of their allowance or earnings goes to fast food or 50 per cent goes to comics or 30 per cent goes down their throat in the form of soft drinks. This leads into a discussion of budgeting which is the foundation of sound money management.
In these courses, students would open bank accounts and reconcile or balance those accounts with their bank statements each month. Reconciliation of accounts is an old fashioned, but important, skill that is rarely practiced.
Many, perhaps most, don't know what is in their bank accounts at any given time and debit cards have made this situation worse. Reconciling accounts forces you to be on top of your transactions. Part of the spending unit could also involve examining the repercussions of not keeping track – overdraft fees, for example.
A final project in the spending section of the course could be an analysis of students' spending patterns complete with conclusions and recommendations to themselves for the future.
Smart consumerism should be covered with an emphasis on comparison shopping, which is the single most powerful tool available to the consumer. Since most kids love to shop, this part of the curriculum offers a wealth of projects designed to teach pricing skills, savings skills and differentiating wants from needs.
In the more advanced grades, students would investigate credit in its myriad forms. With so many options and so many exotic and beguiling products available, young people need to learn how to use credit wisely and also to understand what happens when you get in over your head. Credit, of course, includes everything from credit cards and mortgages to credit lines and even overdrafts.
How car loans and leases work is important knowledge that will save young consumers thousands in interest costs if they make the right decisions. Even a simple task such as comparing interest payments on a no-money-down car purchase versus a 25-per-cent-down purchase shows them how to keep money in their own pockets.
Student loans and student lines of credit are another big problem area. Most students these days need them, especially if they have to leave home to attend university, but a lot of students have no idea what they've gotten into when they borrow to learn. The student loan system is the original buy-now-pay-later scheme.
A terrific project in this section of the course would be to have students figure out the cost of their desired post-secondary education; how much they need to save, how much their parents can help them with and what options exist for an education that isn't burdened by debt. For example, what would be the financial impact of working for a year before college or university?
The penultimate section of the course would be learning about what happens when things go wrong financially. The ugly side of poor financial management should include the tactics of collection agencies, car repossession, the impact of a bad credit rating and the long, dark road of bankruptcy.
The final section would be investments. Learning about equities, bonds and the miracle of compounding could easily be structured into a game. A project showing students how to become millionaires is sure to generate some interest.
So, how do we pay for the creation of such a far reaching program, you ask? We're sure a consortium of credit card companies is forming even now, as a result of this article, in order to fund a money curriculum.
http://www.thestar.com/printArticle/273650
Teaching kids about money should become mandatory
TheStar.com
Start with the basics of budgeting and cost accounting, the teach about interest and debt
November 04, 2007
David Cruise
Alison Griffiths
Special to the star
It's ironic, while the federal government trumpets record surpluses year after year, the citizens of this country sink further and further into debt without savings or investments to backstop them. (For a snapshot of just how far things have gone, see "How bad?" below.)
What can we do to avoid our nation becoming Planet Debt?
This is a vital question to us. Though we write primarily about investing, debt determines if an individual will save and invest. If we don't save and then invest, the economic fibre of our country weakens. So what to do? Start with the kids, in our view.
We should immediately establish a mandatory series of high school courses centred on money. After all what's the point of going out into the work force or on to college or university if you don't understand and can't manage your money.
Early on in the money curriculum students would keep a register of all their incomes and expenditures. What's important here is not the amount of money involved but how it is spent.
Kids will be amazed to discover simple facts like 70 per cent of their allowance or earnings goes to fast food or 50 per cent goes to comics or 30 per cent goes down their throat in the form of soft drinks. This leads into a discussion of budgeting which is the foundation of sound money management.
In these courses, students would open bank accounts and reconcile or balance those accounts with their bank statements each month. Reconciliation of accounts is an old fashioned, but important, skill that is rarely practiced.
Many, perhaps most, don't know what is in their bank accounts at any given time and debit cards have made this situation worse. Reconciling accounts forces you to be on top of your transactions. Part of the spending unit could also involve examining the repercussions of not keeping track – overdraft fees, for example.
A final project in the spending section of the course could be an analysis of students' spending patterns complete with conclusions and recommendations to themselves for the future.
Smart consumerism should be covered with an emphasis on comparison shopping, which is the single most powerful tool available to the consumer. Since most kids love to shop, this part of the curriculum offers a wealth of projects designed to teach pricing skills, savings skills and differentiating wants from needs.
In the more advanced grades, students would investigate credit in its myriad forms. With so many options and so many exotic and beguiling products available, young people need to learn how to use credit wisely and also to understand what happens when you get in over your head. Credit, of course, includes everything from credit cards and mortgages to credit lines and even overdrafts.
How car loans and leases work is important knowledge that will save young consumers thousands in interest costs if they make the right decisions. Even a simple task such as comparing interest payments on a no-money-down car purchase versus a 25-per-cent-down purchase shows them how to keep money in their own pockets.
Student loans and student lines of credit are another big problem area. Most students these days need them, especially if they have to leave home to attend university, but a lot of students have no idea what they've gotten into when they borrow to learn. The student loan system is the original buy-now-pay-later scheme.
A terrific project in this section of the course would be to have students figure out the cost of their desired post-secondary education; how much they need to save, how much their parents can help them with and what options exist for an education that isn't burdened by debt. For example, what would be the financial impact of working for a year before college or university?
The penultimate section of the course would be learning about what happens when things go wrong financially. The ugly side of poor financial management should include the tactics of collection agencies, car repossession, the impact of a bad credit rating and the long, dark road of bankruptcy.
The final section would be investments. Learning about equities, bonds and the miracle of compounding could easily be structured into a game. A project showing students how to become millionaires is sure to generate some interest.
So, how do we pay for the creation of such a far reaching program, you ask? We're sure a consortium of credit card companies is forming even now, as a result of this article, in order to fund a money curriculum.
