“But when are we going to teach students about bank accounts? When are we going to explain banking fees, transaction types and interest rates? When are we going to show them how to create basic budgets, talk to them about how to spend less than they earn, and explain the various saving account options that exist? When are we going to give examples of how credit cards can either be a great tool or an absolute nightmare? When are we going to show them real life examples in a meaningful way that will make them want to prepare for their futures?”
Now no one is a bigger proponent of trying to get more financial literacy taught in schools than yours truly, but I’m losing hope that an actual course that is focused exclusively on financial literacy will ever be offered in most Canadian schools.From a big picture perspective, I agree that not having a course built around giving kids the necessary information they will need every month for the rest of their lives is ludicrous. There seems to be substantial support to at least offer the class as an option (personally I’m in favour of making it mandatory just from the pragmatic perspective that all of Canadian society would benefit from the person next to them making smarter financial decisions) and yet administrations across Canada continue to be allergic to the idea of a course titled “financial literacy” or “personal finance” or anything like that. It’s ok to call a course “seminar in business” which is about as vague a title as you can get, and then use it to teach 80% personal finance concepts because no one really cares about what gets taught in an optional course anyway, but we can’t come right out and say what needs to be said because that might upset someone and the last thing we want to do is engage in a debate that might be somewhat controversial.
The Leviathan (kids out there, Google: Thomas Hobbes)
The absolute largest reason that we don’t see more basic financial concepts taught in schools is that the public education system is about the slowest moving bureaucratic beast you have ever seen in your life. There are so many monetary incentives for administrators and curriculum creators to dabble around the outside edges and appear busy, while changing absolutely nothing that makes a whole lot of difference. There is almost no incentive for someone to rock the proverbial boat and strive for any sort of paradigm shift.
Because of those large incentives, advocates of a dedicated personal finance curriculum continue to hear the same drivel about how financial concepts are woven throughout various curricula in grades 6 to 12. A little gets taught in math, a little gets taught in social studies, maybe some more gets picked up in a couple of optional business courses. What this actually means is that it doesn’t get taught at all most of the time (for reasons we will get to right away) and even in a best-case scenario it tells students that personal finance is merely something on the periphery of what is really important. Students pick up on what the education system values very quickly and with the current approach to personal finance, it is readily apparent that there are not many people in the education system that truly care if it is taught or not.
Teachers Just Don’t Know
My colleague who goes by the pen name Teacherman wrote a revealing column about why teachers are a terrible group to be informing others of personal finance. I won’t go into the detail he did (instead I encourage you to read the column) but I will say that I completely agree with the main premise that teachers in general are just as clueless about personal finance as the rest of the population if not more so. Teachers will continue to play to their strong suits and as long as they don’t have to teach personal finance they won’t. Those little mini-units at the back of math textbooks will just slip through the cracks since, “Gee, there just wasn’t enough time to get to them this year, and where did the semester go anyway?” I have seen this happen dozens of times already in my short career.
I was recently bragging to a group of teachers about how well I thought my recent business class had done with some basic Canadian personal finance concepts (I try to be positive about the highlights since it’s so easy to get bogged down in negative stuff). The class had learned the basic ideas of asset classes, asset allocation, building a very basic investment portfolio, and how tax-advantaged accounts in Canada worked (RESP, RRSP, TFSA), as well as an introduction into concepts like credit and mortgages. The reaction from the teachers was unanimously, “Wow sounds like I could use some of that, I don’t even know what all those accounts mean. I have an advisor that takes care of that for me.” Good luck motivating those future principals and administrators to place a high priority on financial literacy.
Math is NOT Personal Finance
If I have to explain to one more math teacher that just because they teach students the formula for calculating their mortgage payments or show them how to use a tax table, they are not teaching financial literacy, I just might lose it. We don’t replace physics courses with a little 3-week blurb at the back of a math textbook do we? Personal finance is applied math just like physics is (the fact that the math that is needed to be applied is much simpler than that needed for physics should only reinforce how easy it should be to teach a personal finance course to the entire student body). This is obviously a very personal issue for me, but trying to get educators to understand the psychological aspects of personal finance or even the terminology involved with something like index investing when they think that a basic math formula is the cure for everything is incredibly frustrating.
The Influence of Big Banks
It’s very interesting to me that big banks seem to be such huge advocates of teaching personal finance – or at least this is what they say publicly. There is actually an abundance of “personal finance resources” that are out there and there are often sponsored by major Canadian financial companies. The problem obviously becomes that there is a major conflict of interest there. These “resources” are quick to show the benefits of banking products and investing in mutual funds, and usually not a whole lot else besides maybe some very basic budgeting advice.
Naturally these companies can be expected to provide information that supports their business model, but this can actually distort peoples’ idea of personal finance pretty badly. Of course schools love those resources because then they can say they are supporting personal finance instruction and it doesn’t cost them anything since the financial institutions pay to put it in the schools (pretty brilliant marketing really, and very easy to sell to cash-strapped administrators).
A Light at the End of the Tunnel?
So, how do we address this incredible disconnect between what the public thinks is vitally important (and I’d argue even that sentiment understates just how big an issue this is) and what the public school system wants? Well personally, if I lived closer to an urban centre I’d be taking advantage of the situation in order to offer my own private tutoring classes. The other options is writing a book about it (I’m contractually obligated to link to that book once a week).
Seriously though, the only people that can change this reality is parents. This isn’t a chicken-and-egg argument, parents must lead the charge if they believe their kids should receive this essential education. They are the only ones that can provide the sustained pressure needed to push any meaningful reform through.
Am I being too cynical? What do you think the chances are of an actual course on personal finance being developed on a mainstream level any time soon?