Here in the UK student loans have come under fire from our own Parliament. They were complex and downright misleading. The government cannot be sued for mis-selling these loans. Many students are paying back their loans which are rising due to the interest charge. I’ve recently spoken to two young members of my family who are off to university. Both are quite bright but totally financially illiterate. They have never had a class on finance and don’t understand simple concepts like compound interest. One is doing a degree in history and could reel off all the wives of Henry the Eighth – very useful. It got me wondering why this is. Surly it must benefit a society to have a financially literate population.
What is the financial education situation like in the USA. Given some of the stories I see of people taking out bad loans I would imagine it is similar to ours.
I see two 18 year old students making financial decisions that they haven’t a clue about and which will affect a large part of their lives. At school they studied gender studies, DEI and how horrible the British Empire was but absolutely nothing about finance. I can’t understand why this isn’t on every curriculum.
Education curriculum in the U.S. tends to be decentralized to the State level. So we have 50 public (+ territories) systems. Private education and home-schooling are significant forms of education too and have little to no supervision of curriculum- depending on the State one lives in.
But in general, financial education is not robust. In the past, it has been part of certain high school elective classes such as economics. In Virginia, one now needs to take an economics and personal finance credit class in high school to graduate. I would argue that students should be introduced to personal finance topics in middle school and then build on that in high school.
There has been a push to include personal finance curriculum in recent years, but like you say it still comes down to the state sometimes even the district.
NCLB had draconian punishments for schools that didn’t meet performance targets in math and reading, and to a lesser extent science. So schools reduced time or entirely eliminated subjects like history, social studies, art, music, and PE. There was no way personal finance was going to be added.
They finally got rid of NCLB and states were free to create their own performance metrics (within a framework), so personal finance is making a come back.
I’ve done a bit more digging here in the UK - It’s just not on the curriculum here
A crisis is quietly unfolding in Britain’s classrooms, leaving a generation of young people unprepared for the real world.
A potentially financially devastating gap in the UK education system was laid bare in a House of Commons report, when it revealed a staggering 63 per cent of young people finish secondary school without receiving any meaningful education about money.
And I know this is happening, because as a 15-year-old I’m right in the middle of it. Despite plenty of well-meaning campaigns to get financial education on the school curriculum, the reality is that we get very little of it.
Given the importance of finance in a modern society I’m puzzled by this. Those two relatives will be graduating in three years with debts of around £50k - £60k at an interest rate of about 6%. They have been convinced by the education system that a degree will get them a well paid job so it will all work out fine.
Is there a particular reason that you haven’t educated them, at least a bit, about these concepts??? I’ve tried with my kids (and their spouses!) and my nieces and nephews, with only a little success, but a little is more than none.
A difficult but very real issue regarding public education of youngsters about finances is that the subject is fundamentally moral in its foundations: developing accurate awareness of reality, responding to that awareness with a means of ranking through time of what matters, what is mere trivia, and establishing a reliable means of controlling ones actions through time to attain a (hopefully!) consistent moral result.
Benefit to society, but not to business interests.
In the US, we celebrate racism, ignorance and innumeracy. Wealthy crony capitalists have learned that if you keep working people distracted with the idea that black and brown people might be getting some benefit. you can pick their pockets clean.
President Lyndon Johnson explained this in the early 1960’s. Reagan weaponized it by 1980.
At age 17 there is a course on “DEI”? This seems … almost made up. DEI is generally a management prerogative done by administrators, not by students themselves. Also, “gender studies” would seem to be more of a university level course, but perhaps they’ve pushed that younger too. Does it start in 3rd or 4th grade over there?
As for how horrible the British Empire was, most empires are. We could ask India, Native Americans, Indigenous peoples of Canada and Australia or others about their viewpoint, but then that would just play into the whining, wouldn’t it?
I do support the including of financial literacy into education at the appropriate point. I’d say “after allowance” but “before employment” would be a good place.
Yep, here in the UK all our public bodies have to be up to speed with DEI and a load of other things. It starts a lot earlier than 17 years though:
For many pupils in the UK, the arrival into primary school will be their first major opportunity to experience diversity, bringing with it the potential to meet peers, school staff and teachers who represent different backgrounds from their own.
With this in mind, it’s important to consider whether the curriculum we teach represents and reflects the diversity we see in the modern world.
We white Brits are constantly being told how bad we are, and how guilty we should feel about this. Far more important than being able to deal with your finances apparently.
1/2 of the world were slaves at one point or another in history. It still exists in some parts of the world today. Somehow, we’ve settled only on western civilization as having an ongoing debt by those that never owned slaves to those that never were slaves.
It’s is important that we study the good and bad history of our nations and to understand it in the context of the times. Beyond that, it has no bearing on the opportunities available today regardless of race, creed or color.
The truth is DEI, it’s just an extension of Marxists ideology aimed at identity rather than the more classical worker vs businesses owner or poor vs wealthy struggle.
It’s nearly worthless in terms of its practical value and students would be better focused on understanding basic finance. In practice, it does not allow for diversity of thought, promotes inequitable treatment, and exclusive of whole groups rather than inclusive.
The most important thing in finance is how your income is taxed. The dumbest thing you can do in America, tax-wise, is to work for wage & salary income. The types of income wealthy people enjoy are taxed at a much lower rate, or not at all. Getting folks ginned up about DEI distracts them from the real issue. Wasn’t BREXIT the solution to DEI? How did that work out for working people?
But hopefully they fixed all of their serious DEI issues that were causing such societal harm..
Using a decade of data since the referendum, we combine estimates using macro data with estimates using micro data collected through our Decision Maker Panel survey. These suggest that by the end of 2025 Brexit had reduced UK GDP by 6% to 8%, with the impact accumulating steadily over time. We estimate that investment was reduced by 12% to 13%, employment by 3% to 4% and productivity by 3% to 4%.
Never mentioned as far as I can remember. The EU was keen on DEI though:
Still doesn’t explain why there is no financial education for young people. I must have been lucky as i recall studying accountancy and economics before university.
The EU was well aware of the low financial skills of its citizens:
Yet, levels of financial literacy in the EU are low. According to the [2023 Eurobarometer survey, less than one fifth (18%) of EU citizens have a high level of financial literacy.
The most important thing in finance is to live below your means and be a prodigious saver. With that savings, allow the power of uninterrupted compounding of that savings do its thing.
Big difference in after-tax compounding for workers vs. moneyed elites. And if you don’t understand this, you really can’t claim to be financially literate.
{{ In America, we tend to tax working people and small business owners up the wazoo. Inherited wealth gets a pass (e.g., America’s large multigenerational fortures are mostly the result of the lack of taxation, rather than whatever productive activity the first generation innovators and workers were up to) and qualified dividends and capital gains are taxed at a much lower rate than wage and salary income.
Case in point: a married couple with a $120,000 annual wage & salary income, taking the $29,200 Standard Deduction, would pay $8,256 in Federal Income Taxes for 2024, plus another $9,180 in FICA for a total of $17,436. A neighbor couple with a multi-million dollar investment portfolio might decide that working made little sense. Instead they draw $120,000/yr in qualified dividends and capital gains from their portfolio. Their Federal income tax liability? Zero. (See, 2024 IRS Federal Income Tax Table)
FICA punishes working people even more. You secure your full Medicare benefit with just 40 quarters (10 years) of work. You gain no additional Medicare benefit from FICA taxes paid beyond that. For a person with an income triggering the maximum FICA tax, you get very little benefit from working past the age where your Average Indexed Monthly Earnings (AIME) exceeds the 2nd bend point of the calculation. That would be about age 45 for someone paying max FICA starting in their mid to late 20’s. If you happened to retire right at the top of the 2nd bend point, you’d be getting 77% of the maximum monthly Social Security benefit while only paying about half the FICA taxes. There’s not much of a case for working beyond that. (See: Why high income 40 year old retirees still get crazy big Social Security checks at age 62 )
When I quit my high salary engineering job back in 1994, I was astonished at how little I paid in taxes on the same level of spending. You almost had to volunteer to pay any taxes by selling something. If more working folks understood this, they’d be sharpening their pitchforks. The dumbest thing you can do in America, tax-wise, is to work for a living earning wage & salary income. }}