Parents: It’s Not Your Job to Teach Personal Finance

As BiggerPockets fans, I think we can all agree that it is important for everyone to know basic personal finance concepts. Our country is in a financial illiteracy crisis, and nobody seems to be taking the lead to improve it. One place to start changing the trend of bankruptcies, massive credit card debt, seemingly insurmountable student loan debt, low credit scores, and foreclosures is to focus on the next generation to enter the real world – teenagers.

Recently, I wrote a blog post about why I think teenagers should be taught personal finance. Not a controversial opinion, for sure. After all, who doesn’t think our youth (among others) should know these critical skills, concepts and strategies?

Just to be clear – I’m talking about basic personal finance, not the FI movement offshoot of financial literacy. Although I am a huge advocate of FI, our teenagers need to start with the basics.

If we all can agree they need personal finance education, the real debate is around who is responsible for teaching them. Schools or parents seem to be the two most common answers, but neither is sufficiently equipped to do the job. And there are times when they both seem to stand by and point the finger at the other. So which is it? Let’s look at the pros and cons of both alternatives.

THE PROS OF SCHOOLS

When we discuss our public schools teaching personal finance there are many ways to go about it. For the sake of this article, I am going with the idea that a semester-long Personal Finance class be required for high school graduation.

Pro #1 - Personal Finance classes already exist in almost all urban high schools and most rural ones. However, with the exception of 5 states, these classes are not currently required for graduation.

Pro #2 - Nothing has to be “invented”. The textbooks are there. The curriculum is there. The assessments are there.

Pro #3 - In these classes, students can be taught by experienced business teachers. Teachers who went to college and probably majored in business. Ideally, these teachers are experienced and proficient in both personal finance content and pedagogical strategies.

Pro #4 - It is conceivably easy to reach ALL teenagers less some who don’t graduate from high school.

THE CONS OF SCHOOLS

Con #1 – It would require a monumental policy change for states and/or school districts to make the class a requirement.

Con #2 – If all players are not on board with the change, the “requirement” could get watered down to a week of personal finance instruction taught by teachers of other content areas to “meet” the requirement. (Already happening in some schools/states.)

Con #3 – Making the class a required class would necessitate a lot of uncomfortable change within the schools and potentially more funding.

Con #4 – It is only 4 months of instruction. (1 semester)

Con #5 – Students may not retain and/or execute the knowledge they are taught.

THE PROS OF PARENTS

Pro #1 – Parents can incorporate personal finance lessons throughout the student’s entire life up to high school graduation.

Pro #2 – Parents can individualize the instruction to match the student’s strengths and weaknesses easier than a teacher can. (Think of helping one student instead of thirty.)

Pro #3 – Parents can use rewards other than grades such as money, additional screen time, food, and gifts.

Pro #4 – Parents can use real-life examples that actually affect the student’s lives to reinforce lessons.

THE CONS OF PARENTS

Con #1 – You can’t teach what you don’t know. Most adults in our country are financially illiterate themselves.

Con #2 – Much like the topic of sex, most parents are uncomfortable talking about money with their children so they avoid the subject.

Con #3 – Teenagers who are at-risk need personal finance education the most but are least likely to receive it at home.

Con #4 – The chances of ALL teenagers learning personal finance from their parents is minuscule.

Looking at all of these pros and cons, it seems obvious that the only way to reach ALL teenagers is in school. Most cons of teaching personal finance in schools are winnable (#1, 2 and 3). As for the remaining cons (#4 and 5), the change to make it required will be a starting point but not the finish line.

Conversely, most of the cons of parents teaching personal finance are insuperable (#1, 3 and 4).

So which option do you think is best? Schools or parents? I challenge you to make a choice and not say “both”. If we agree that ALL teenagers need this knowledge, which option is most likely to fulfill that need for ALL of them?