Financial Literacy in Schools

February 28, 2010 at 1:33 pm 2 comments

Recently I overhead a debate about whether schools should teach ‘financial literacy’ or not.  On the one hand, it was being argued that it is not the school’s responsibility, that this should be done in the home and we need to stop pushing parent responsibilities onto school personnel.  On the other hand, it was suggested that kids are not learning about money at home so schools need to take it on.

I would argue that kids ARE learning about money at home.  They can’t help but learn as they observe what their parents (or guardians) do, and what they say about money.  It would probably be more accurate to say that some kids are not learning how to make ‘middle class decisions’ about money.

What in the world do I mean by ‘middle class decisions?’  I’m going to draw from the work of Ruby Payne, who is probably the foremost authority on the mindset of the various classes in many matters–money, relationships, survival, time, destiny etc.  By the way, if you are an educator, her book, “A Framework for Understanding Poverty” is a must read, unless you are teaching in a private, very influential area with no chance that poor kids would ever cross the threshold.  Even then, I would argue that the book would help you understand much about the mindset of the wealthy population you are serving in the context of a world whose rules are predominantly centered around ‘middle class’ ideas.

Back to the topic at hand–financial literacy in schools.  I’m certainly in favor of Americans becoming more literate about their finances, becoming more responsible for their financial decisions, and taking the lead in planning for their retirement.  I’m not opposed to public education as a conduit for valuable information such as personal financial decision-making and financial literacy as a whole.  However, I think we are trying to leap the Grand Canyon if we believe that knowledge about finances naturally translates into a change of behaviors where money is concerned.

I have a good friend and colleague who has really helped the work of Ruby Payne come to life for me.   He truly was raised in an impoverished home, and it is clear that his experiences as a child have lead to a very different ‘relationship’ with money than what I have as a product of a middle class family.   He intellectually knows a lot about managing money, but there is no doubt that the enculturation process into ‘poverty thinking’ as a child continues to be a pervasive force in his thinking.

I suspect that part of the drive to require schools to teach financial literacy is an attempt to ‘fix’ what Middle Class America would deem to be poor decisions and poor money management by a faction of citizens.  However, if you begin to understand and put yourself into the shoes of a family living in poverty, you can begin to see how the decisions they make seem logical in the context of the world in which they live.  Let me give you an example to try to  bring this life.

Imagine that you know a family who is constantly behind in their bills.  Kids are on free lunches at school.  They live in a rental and this is the 4th house this school year, because eventually the landlords throw them out because they aren’t paying their rent.   It is not uncommon for the kids to report that the electricity has been turned off again at their house.  You get the picture….

Now suppose that this family comes into a $1,000.  It doesn’t matter where the money came from.  Maybe Aunt Mable died and left it to them.  Maybe they had a winning lottery scratch off ticket.  The point, is they have a windfall of money they didn’t have before.  Now imagine that you learn that the family did NOT use the money to get caught up with any of their bills.  They did not save any of it, and they didn’t use it to buy things like clothes for the kids, to stockpile grocery staples or to buy a used washing machine/dryer set so they could stop going to the laundry mat.

Instead they gave (yes, you read right, gave)  $500 to their cousin who hit them up after learning that they had this windfall of money.  The remainder of the money was used to eat out at fast food restaurants, buy a used 4-Wheeler at a garage sale, and buy games for their Wii.  If you have a middle class mindset and relationship with money, none of this makes any sense.  Why would you give money to another person when you yourself aren’t making ends meet?  Why would you squander money on things you don’t really need when you had so many options for making ‘better’ decisions?

I’m going to be painting with a broad stroke, but generally those of us in the middle class view possessions as things and see money as something to be managed.  Additionally, the future perspective is the most important time frame so middle class persons make decisions that consider future ramifications.  On the other hand, persons of poverty believe that people are all you can really count on and money is to be spent or used.  Their decision-making is based in the present not the future.  Therefore, decisions tend to be made based on feelings or survival.  In the world of poverty, people are all you can really count on anyway and  you are therefore, ‘obligated’ to help each other if you can.  It goes without saying that telling your cousin  ‘no’  is not an option, just as they would not tell you no if the tables were turned.

My point is this.  We all learn about money, what it is and how it should be used, from the significant others in our world.  Providing knowledge to the family depicted in the story above, about how using the $1,000 differently today, could lead to different results down the road will not necessarily translate into different decisions and actions.  After all, the $1,000 will not be enough money to propel them permanently to a new living standard or new social class.  The reality is they continue to be a member of the poverty class and the social norms and mores are well known by all.

I could make a similar argument for those individuals living in more affluent, wealthy settings.  Teaching them ‘middle class decision making’ surrounding money makes no sense.  They have their own set of rules and social expectations.

Nonetheless, are there some universal pieces of knowledge that all parties, regardless of social class should know?  Probably.  I’ll address this in a later post.

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Entry filed under: Education, Financial Literacy, Recommended Reads. Tags: , , , , , .

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