While high school officials may lament about their lack of resources for the STEM subjects (science, technology, engineering and math), one important topic --money -- doesn't even get a place on most schools' academic menus. This leaves many high school students ignorant of the differences between financial tools such as checking, savings accounts, loans and other financial topics at a time in their lives when they most need to learn about the topic.
Teaching kids about finance and money management in high school makes sense, according to an article in "U.S. News and World Report." While some financial experts believe that students should start learning about money before they enter their high school years, it's also during these years when many kids begin taking on more financial responsibilities.
They get part-time jobs after school and buy cars, which they need to insure. They have also started making decisions about going to college, including how to pay for it. Having coursework in money management during high school prepares these students for these eventualities, as well as teaching them how to budget before they become overwhelmed with additional financial responsibilities.
Saving Over Time
A dollar fifty for a daily soda doesn't seem like much, but teaching kids to avoid these small expenses and save the money instead reaps great rewards. For example, a student who buys a $1.50 soda each day for a year will spend over $500 that year.
However, that amount can turn into a much greater number if these students learn to use the power of compound interest, especially when they are young. The longer they save these small amounts, the more money they stand to earn over time. Over the course of 15 years or more, that $1.50 a day becomes almost $9,000.
Avoiding Large Amounts of Debt
Student debt has mushroomed into a huge problem. According to the website The Project on Student Debt, the average debt that two-thirds of students graduate college with amounts to nearly $27,000. While college students receive debt counseling once they leave university, Kathy Chu argues in a "USA Today" article that schools don't wait until a student is in college to teach him how to read.
The same should go for debt. By the time a person hits 25 or 30, he cannot afford to buy a house because of his debt-to-income ratio, with student loans accounting for much of this debt. Teaching students about these realities before they borrow allows them to make better decisions about borrowing money. With this information, they may instead opt to work more, go after scholarships or wait to attend school.
Credit and debt go hand-in-hand. Once you teach a high school student about too much debt, the next lesson should be how to build credit. Paying off debt over time allows a person to develop a credit rating, and having a solid credit rating allows her to purchase big items such as cars or homes over the course of time.
According to "U.S. News and World Report," a debt-to-income ratio of 36 percent represents the ideal. Anything over this amount makes it more difficult to borrow money. High school instruction in money management should include this topic and can go hand-in-hand with lessons about creating monthly budgets that will ensure that these bills get paid on time.
- US News: Why Most High Schoolers Don't Know How to Manage Their Money
- US News: Basic Money Lessons You (Probably) Missed in High School
- USA Today: High Schools Teach More Kids Basics in Finance 101
- Huffington Post: Student Debt Nearly Tripled In 8 Years, New York Federal Reserve Reports
- Federal Reserve Bank of New York: Press Briefing on Household Debt and Credit
- Baltimore Sun: The Earlier We Learn Financial Lessons, the Better
- Project on Student Debt: State by State Data
- US News: Are You in Over Your Head?
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