As a youngster growing up in the public school system in Eastern Ontario, I remember taking a whole slew of courses designed to prepare me for my post-secondary studies and to a larger degree, adulthood. Calculus, Biology, Chemistry, Physics, Law and English, to name a few, were part of my high school senior year curriculum. For the most part, these courses and the teachers that taught them did their job – these courses helped me figure out what I liked (what I didn’t) and laid out the foundation for what I would experience in my first year of university. Unfortunately for me and likely many other high school students, those courses did not include any money management principles, principles I would need shortly after graduation.
As with any stage in life, you don’t know what you don’t know. So, looking back as a teenager living in university residence and later as a 20-something renting houses with friends, I certainly didn’t know very much…
What should I be using for a credit card? Everyone else seems to have one. I suppose I can live with paying the minimum for the next few months…
What should I be looking for in a house to rent? Are there any considerations I should be thinking about besides being close to our buddies’ house?
Should I bother investing in an RRSP while I’m at school? The representative at my bank keeps telling me so. Besides, I own lots of mutual funds already.
I need to apply for a student loan next year, to continue my post-secondary studies in Toronto. What on earth am I going to do if I don’t get the money?
Like most students I answered some of these questions on my own, through trial and error, without the internet being what it is today. Sure, my parents offered great guidance when they could but they only knew what they knew as well.
With limited education and experience in personal finance, some of my financial decisions were bad ones.
Along with my friends, I fumbled through university financially and I could have done so much better. I suspect history is repeating this month with tens of thousands of new university and college students starting their post-secondary education. To help break the cycle, I believe we should put more stock into our school system.
Today’s post will highlight the personal finance subjects I wish I learned in school. Feel free to add your comment below about what you wish you’d learned as a teen or 20-something, or tweet me about your idea. I know answers to these questions would have helped me much sooner in life:
- What are the pros and cons of owning a credit card? Do I need one? How can I use one wisely?
- What details should I look for in a rental agreement?
- What are the types of bank accounts I can have? What are the differences between them?
- What is the process I use to apply for a student loan? What are my obligations once I have this loan?
- What is the stock market? How does it work? Do I even bother investing in it as a student?
- What is the bond market? How does it work? Do I even need bonds in my portfolio as a student?
- What are interest rates? Do they apply to me?
- What is a budget? How does that work?
- What are mutual funds? How do they work?
- What are the elements of a tax return? When do I need to file one? What resources are available to me to help me with my tax return?
- What is a mortgage? What are my obligations once I have one?
- What is a credit score? Does this apply to me as a student?
- Besides my bank, who can I talk to about this financial stuff? Are there any free resources available to me?
My teachers and our school board in Eastern Ontario did their best, I know this. However, if I could recommend one major change to our education system, it would be to make personal finance a mandatory course in high school. I’m convinced such a course would not only improve the financial lives of young students but the content would also help our Canadian economy prosper on the whole; reducing consumer mistakes that translate into economic waste. The more knowledge, skills and competencies young adults have when it comes to personal finance, the better decisions they can make. Young adults who make informed decisions can grow into working professionals that can make even better financial decisions.
What’s your take? Is there enough financial literacy in our education system?
I agree with you Mark, this should be taught in schools, and there would be no need for my investing course. All of my students wish they had learned this stuff when they were younger. There’s a huge lack of financial literacy in our education system.
I’d also like to add to your list of questions:
– What is a stock?
– What is a dividend?
– How do you know when a stock is undervalued?
– How do you determine which stocks to invest in?
For some strange reasons, schools don’t seem to think that teaching personal finance is important. I don’t want to discredit other subjects but I think personal finance should be a priority.
Actually, they could simply include this in their math program. If you are about to learn how to add, subtract, divide and multiply, you might as well to learn about the devastating effect of interest rate on your credit card and about the true power of compounding interest. I mean, why do we have to be an adult to learn about the rule of 72?
I think that personal finance classes should be mandatory starting at primary school!
As I get older Dividend Guy, I certainly don’t get it. There is SUCH a body of knowledge to understand. The earlier people start learning about it, the better. Understanding money management principles is a critical competency of adulthood.
Adding it to the math program actually doesn’t work at all (counter intuitively) because math teachers don’t think it’s “real” math and consequently it never gets the proper attention. Also, the vast majority of math teachers have no concept of how to apply math to personal finance situations.
I think I am likely the biggest advocate of this in the world Mark. In fact if your headed to FinCon13 you’ll hear do me a talk on it! I’m a part of various groups and committees that has been trying to get some momentum going on this for a long time, but it is just so hard to move anything in the world of educational bureaucracy.
On the bright side, I hear there is a great book on the market that goes a long way to helping Young Canadians understand some of this personal finance stuff – and it’s way more reader friendly than a textbook!
I’m pretty sure there is a podcast by the same name available for free as well? Care to be on it and discuss this issue some time?
I wish I was going to FINCON13, but CPFC13 will have to do instead. 🙂
Yeah, your book was excellent. Don’t worry, I’ll continue to plug it!
As a matter of fact, I might take you up on your offer for a podcast. Never done one before and it might be fun! After CFPC13, I will drop you a line and we can plan a time to set something up and discuss some personal finance subjects. I will email about that.
Thanks for the offer and chat soon,
Awesome, looking forward to it Mark!
Unfortunately the schools here in the US aren’t any better with teaching personal finance, at least not when I was in school. One idea I’ve toyed with for when I reach FI is to either become a high school economics teacher or give local seminars targeted towards teens/young adults about personal finance. In my economics class in high school we mainly covered very broad subjects like supply/demand and then macro issues. The only personal finance related topic that we covered was creating a food budget but it wasn’t anything in great detail. There’s so much potential with a personal finance course that would drastically change the financial lives of many. I know it won’t change everyone but considering that for most people money is still a taboo subject this is one way to open the conversation about it and at least get them thinking about it.
Good comments JC. In a sad way then, Canada is in lock-step with the U.S. on financial literacy.
My economics class also dealt with macro-economics, but that does little to apply in your personal life.
Things need to change.
Also having grown up in Eastern Ontario as well, in a high school with a graduating class of 32 students, I didn’t have access to many of the courses you’re mentioning – school was too small. However we actually did have a class in Grade 9 called consumer ed. It addressed things like how to right a cheque, budgeting, etc. I took the course. It didn’t stick. I had to relearn everything once I got into the real world.
I like the idea of financial education at school, but not sure it works. I’m a proponent of teaching this stuff at home.
Consumer Ed., well, that was a start right Glenn?
Teaching at home is good as long as the parents have enough literacy to do so. Parents only know what they know.
I think finance would be good to be taught in high school, though I’m not sure it should have it’s own course. We learned about compound interest in math, and budgeting in “family studies”. I think it could be organized so that you learn bits and pieces in different courses that make sense to the particular financial topic.
I think it would be excellent. Think of all the additional content you’d have for your blog if you knew more? 🙂
I totally agree that a Personal Finance class should be mandatory. I do think I was ahead of the game though because I did take an elective in my high school (in Calgary) called “Personal Living Skills”. The class covered everything from how to balance a cheque book, how to open an RRSP, how to budget, etc. One of the best classes I ever took in high school and one that I still remember and can apply to everyday life (unlike some of the others that I took)! 🙂
Great comment and glad to hear about the course you took. I know I could have benefited from something like that, not waiting until my 20s to start figuring stuff out!
Thanks for sharing.