The Top 1% Have a Secret

What could very well be the single most important factor that the wealthiest 1% in America share is NOT being born with a silver spoon in their mouths.

No guessing necessary, you’ll find that the primary differentiator is FINANCIAL EDUCATION.

Say whut?  Well, here’s is what one writer said that pretty well sums it up, what brought this topic to mind in the first place:

“I graduated from high school not having been taught the following:

• How to balance a checkbook
• How to prepare taxes
• What “investing” actually means
• How to set up a brokerage/retirement/checking account
• How to apply for a loan
• How to calculate ROI
• Pretty much everything else related to money”

The root of the problem is that we do not mandate the education of money business throughout our children’s schooling. They are supposed to compete in what is now a global economy to earn money and build a portfolio for the duration of their lives with zero formal preparation.

The wealthiest tycoons who didn’t inherit their net worth, most likely inherited their parents’ wealth of knowledge on the subject of making and investing money — which is just as valuable and just as rare.

So, what’s my point here?

Assuming that we’ve agreed upon the importance of the study of money and on the significant advantages of early education on success in a given field, the point is very simple: We have to mandate education of this subject to the children in our public schools.

Maybe you’d say that Financial Education is the job of parents, not schools. I don’t think so…. How the heck can they teach something they never learned themselves? OK, that’s not supposed to be an insult -- there’s no shame in being untrained financially any more than there is in being unable to teach Biology, Physics, English Literature, Algebra etc. 

BUT, as it is, the children of the financially illiterate will one day be forced out into the real world to compete with the children who were given an education on money.  Even if they don’t jump to the 1%, I’m willing to bet they will be closer, and their children even closer with each subsequent generation.

Of course the other traditional core subjects are important, but they need to be squeezed, shortened, or otherwise reduced to give personal finance education just as much priority, making it a core subject in our childrens’ education, just like language, math, and science.

It really should not be that hard. Finance curricula have already been produced and are part of the catalog of classes that school districts can draw from for their programs. The issue is that they generally do NOT use them. And there is no mandate from most states to incorporate them.

They may think they do by offering “Economics” -- here are a few items from a state Economics curriculum plan:

• free enterprise, socialist, and communist economic systems.
• the right to own, use, and dispose of private property.
• the interaction of supply, demand, and price.
• the reasons for international trade and its importance to the United States and the global economy.
• the issues of free trade and the effects of trade barriers.

Another state curriculum plan does address “Personal Financial Literacy “, in part including:

• types of business ownership
• the role of financial markets/institutions in saving, borrowing, and capital formation
• the role of individuals in financial markets
• costs and benefits of personal financial decisions
• how to provide for basic needs while living within a budget
• methods available to pay for college and other secondary education and/or vocational training.

So what can we do about it?  Pressing our school districts to do the job right is a start, but you know as well as I do, it will be an uphill battle just because of inertia and resistance to change.  It will take some time, so what about NOW?  Give the kids an allowance (or do they “work” for it?) then take them shopping to teach them how to spend it?  Ummmm….. no, no, no and no.  A good start is teaching those basic things in the first list above, things we very likely had to teach ourselves.  Then we may need to do some studying of our own to proceed to the more “advanced courses.”

There are two major impacts to be seen from improving financial education, first, individually for the children who will have an advantage in their futures and secondly, strengthening the US national economy.

What do you think?  Do you have Personal Finance Literacy available in your schools?  Are you teaching your children?  Were YOU taught?

Primary Source:  Scott Trench | BiggerPockets.com

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