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Oct 7, 2008 11:06 pm US/Central
Good Question: Are Schools Skipping Economics 101?
(WCCO)
Many of us don't understand much about how our economy works. We know little about loans and even less about money. So we get home loans we can't afford and pay way too much interest on our credit cards. Should schools be teaching us about finances?
"I think we all need help," said Bob Kaitz, President and CEO of Best Prep.
"It starts with the schools, but it really starts before that with families. Typically families have not done a great job in transitioning their children into the work world or into the savings world. We usually throw them into the water and hope they're going to be okay," he said.
Best Prep is a 32-year-old non-profit which brings volunteers into schools to teach students financial literacy skills using interactive, hands-on activities -- all for free.
Kaitz said right now Minnesota schools aren't required to teach students about finances.
"So students are going to learn what they need to know when they need to know it. Unfortunately sometimes it's too late," Kaitz said.
University of Minnesota student Caitlin O'Rourke and her younger sister Shauncey wish somewhere down the line they'd been required to take a finance class.
"I feel like I'm not prepared on that side and that I'm going to have to go back to mom and dad and say can you teach me. And that's a little embarrassing," said Caitlin.
"I think even in high school, even just learning to balance a checkbook," said Shauncey. "I still struggle with that one."
"Start out the junior or senior year in high school," said Caitlin. "We have so many requirements, like our general education, why shouldn't finances be one of them ?"
What Kids Need To Know
Kaitz said there are four things kids need to know:
- Saving is a good thing.
- Savings should be not only for short term emergencies, but for long term goals.
- Set financial goals.
- More education provides more choices and more money.
What We Should Be Teaching Kids
Kaitz also said there are certain lessons that will better prepare kids for the real world. They include:
- Pay yourself first. Saving money is how you build wealth.
- Always pay off your credit cards at the end of each cycle. Don't treat your credit cards like a loan.
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Differentiate between needs and wants. Your kids need food, but do they need another video game?
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The power of compounding. Teach your kids how money can grow over time.
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Diversification. Don't put all your money in one place—remember Enron?
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If an investment sounds too good to be true, it probably is.
These kinds of lessons are what Best Prep brings into the classroom. They do interactive, hands-on activities. And it's all free. So even if schools don't have a person who can teach your kids, Best Prep can find someone to help.
"We have an exercise in one of our programs where we take a look at denying ourselves a soda pop or a latte once a month or maybe once a week. It's amazing to see the kid's faces when they see how much money you can save that way. I think we all have to look at what we spend our money on. Most everybody can find ways to cut corners and begin to make a difference," said Kaitz.
Jordan Kasinskas is a senior Biochemistry major at the University of Minnesota.
"I'd like to learn how to invest or when to invest. I'd also like to learn how to invest in stocks," he said.
"My parents didn't teach me a lot about finances," said Matthew Sandstedt, a senior Psychology major at the University of Minnesota. "They taught me how to balance a checkbook and basic things like that which I'm thankful for. I don't necessarily think I'm prepared from a financial standpoint, especially with the economic crisis we're in now."
"I think that might be a good idea to make people more fiscally responsible and put us into an environment where we can make better decisions about what kind of mortgages to get on our houses so we don't end up in situations where we're losing our houses," he said.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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