Education
Within the scope of influence on human development - primary education must be seen as having a formative influence on us all. Education’s influence takes on several forms and isn’t strictly intellectual. Were education to be a mere learning of facts this chapter would be a bit simpler. For many, education is one of the first open doors to the world outside our family. We begin to be exposed to information, ideas and people outside of what can be gleaned from those we live with. Social development expands. Subjects start to shape interests. Other influences open our eyes to a broader world.
All of this happens during the most formative stages of human development and that is why it is so important. Understanding childhood development is key and seeing how the phases change from early elementary school, to the middle school years where we transition to adolescence. By high school and college, we are deciding the type of adult we are going to be and taking the knowledge, skills and beliefs into shaping the future world.
Like me, many find new interests and are influenced towards new levels of our potential by those in education. My junior year of university I sat in my first introduction to ethics course. Ethics did interest me, but is was my professor, Dr. David Gushee, that made me change my major that day after only one class. For others, a coach through school sports steps in to a role like that. Many can point to an influential teacher or professor that did what Dr. Gushee did for me. This is education’s ‘magic’ layered on top of the intellectual and social development. They are content deliverers, content creators, mind shapers, and must be considered to be a critical component to making a significant shift in the conversation around The Future Poor.
Primary education of Middle School and High School educational curriculum seems to have followed the same path, especially within mathematics, for the better part of the last 75 years. There was a need to have a broad general understanding of all types of math concepts, algebra, geometry, trigonometry and calculus (in that order and still in that order) for entrance into higher education. We have always wanted our students to be educated and to have generalization established before moving to particular expertise later on in college or graduate school. While not everyone followed the path to higher education, we worked to ensure that high school graduates would have core competencies that would assist them as they entered the workforce and adulthood.
This system hasn’t backed away from this stance. In that sense, it has not backed away from individuals in the same way the other members of The 5 have. However, a great distance has been created between education and individuals because society and its people have moved forward. As my oldest children are entering into Middle School and High School, I have been watching what they are learning and it is essentially a repeat of what I learned 30 years previous. Some world and US history, learning the presidents in order, reading and writing, some science, and the same mathematics as I mentioned before. One thing that is missing in all of this is any education around money and economics. It was missing in my day and it is still not present.
We can intuit that money is important, maybe one of the most important things to learn about and understand. We also know that money is numbers, math, percents, adding and subtracting, multiplying and dividing and yet it rarely if ever appears in any current mathematics program. It has been avoided or placed somewhere outside of the math realm to a small section of a home economics class - as was the case for me at my high school. A total of one week out of four years of high school.
There are some very sound reasons why I believe this doesn’t exist broadly in primary public education as of now. First, it is not part of that old mode of education as a feeder to college. That model, however, was built during a time in history prior to the history outlined in previous chapters. Second, it is hard to teach what you do not know. We have all had a substitute teacher that was out of their depth with the subject, a teacher that was given a new subject to teach or a sports coach that had to teach a course in something they knew nothing about. It doesn’t work that well! Since teaching money math has never been in the system it is no wonder that educators wouldn’t know much about it.
Colleges and universities are where the big move away from individuals occurred, especially after the 1980’s. As far as content goes, secondary education works like primary education in that there is a couple years of general education for the advancement of those broad subjects learned earlier. Then there is a couple years of focused work in your major and minor areas of study. Aside from majoring in finance and economics (and I am still skeptical that those majors actually teach money math for daily life) there is no educating people on money. It is not required to know anything about money and there may be some incentives for the university system to keep it that way.
In the time I have been alive, there was a doubling down on college’s importance for your well being. The Reagan administration placed a heavy emphasis on education that only carried over into the American psyche so that by the time I graduated high school in the late 1990’s, the options were to go to college in order to have a future or end up working for minimum wage in the fast food industry the rest of your life. We had a few anomalies like Steve Jobs and Bill Gates that didn’t fit that mold, but the system, the ethos, the opportunity to do different things hadn't caught up to the entrepreneurial world we live in today. This was the culmination of the old model meeting the new economy and being a significant contributor to the ethical crisis we now face.
The old model and new economy found their home within the universities and they thrived while individuals got the bill. Nothing in the US has inflated quite like education expense. From 1980 to 2014 it grew by 216% more than two times that of the overall consumer price index for all goods. Average tuition rose from just under $10,000 a year to $24,000 in 15 years. Nearly all of that went to the administration of universities and the pockets of administrators while there was little change in the actual educational aspects of the universities. In many ways, this stands as one of the greatest ‘get rich quick’ schemes of the last 40 years with education being almost mandatory, the cost of it skyrocketing to the point of taking on debt, the institutions pocket the money and graduates are left to pay the bill forever.
By now, we are beyond conspiracy theories about education funding as much has been written about this particular aspect of what has happened over the last 40 years. Like most of these situations, individuals end up being solely responsible while other responsible parties walk away. Student loan debt has now amounted to over $1.7 trillion dollars at the time I write this with many feeling like there is no way out of it. The bill of goods that was sold said that college education would result in better jobs, but those are not enough when there is a huge burden college debt holding you down and keeping you from making any progress. Second, only about 15% of people use their specific educational discipline professionally and most of those are in professional realms like law and medicine.
I am not unsure if this issue can be placed on the top of the list of contributing factors to the road to the future poor, but I do know that it is close. If nothing else, it has been and can continue to be the bait and switch that gets you stuck on the road and then can act as blinders or shackles that keeps you on it forever. For most of the sub-50/sub-150, part of their origin story to being the future poor is this situation with college debt with the combination of never being taught any money math throughout their time in education.
With money and our current crisis, interest in finance or math cannot be a prerequisite for learning. We do not ask students if they are interested in learning to read and write, no! We teach them these because we know their intrinsic usefulness for them as they progress towards and into adulthood. Adults that cannot read and write simply cannot function in a society dependent upon those skills.
Just like reading and writing, money education or financial literacy is as necessary for adult success when living in a society dependent on money. Some studies state that people that cannot read are 3x more likely to have dementia later in life. Those adults without financial literacy end up facing a type of ‘financial dementia’ marked by “impairment , which negatively impacts a person's ability to function and carry out everyday activities.”
Education is profoundly important in creating financial literacy because of its dual role of academic and social development. Children's minds are developing at profound rates and we know their learning abilities at young ages is far superior to that of adults. They are like sponges which is why many countries teach multiple languages to younger children. The content we decide to teach them will have a lasting effect which is why we do math, reading, writing, shapes, colors, days and months early and often.
Education’s second power is that it is foundational for reinforcing social development of people. This is beyond obey/disobey for the sake of getting through the day. There are rules to follow for order and there are unwritten relational rules that can only be learned through interaction. Learning how to negotiate and operate with peers and superiors, to problem solve disagreements over who hit who or who had the ball first is fundamental. Armed with both, we should be able to move the ball forward in financial literacy for children in helping them understand key aspects of the financial world they live in and know how to be socialized around money.
The state of Florida recently became the first state to mandate and implement financial education as part of their education curriculum. My hope is that this is the first domino of many to fall in order to bring this type of teaching to schools. But the question remains about what aspects of financial life we should teach children. I have yet to review any curriculum proposed by Florida but I have a sense that there are some key overarching and helpful concepts.
A simple survey done a couple years ago and reported on by cnbc stated that 2/3 of Americans are confused about what their 401k actually is. That is alarming given the 401k’s prominence and how many Americans are solely relying on it. It is also not surprising since most people I have worked with do not quite understand employee sponsored plans, understand their basic mechanics or what options they have within them.
Where most adults find themselves today is not having enough time and not having enough money to alter their course. That is a problem and the whole aim of this work. Children have time! To show kids how valuable time is for money may be one of the singular greatest things we can teach them in regards to financial literacy.
The power of time is connected to the power of compounding interest.
This is where practical mathematics lives and the mathematics that will be most valuable for students to learn and learn early! How compounding works is one aspect as well as assisting with looking at fixed returns and varied returns on your money to help kids know the difference and not be led astray by gurus, tik tok or worse.
These two laws have broad sweeping application into areas of money growth, how interest on loans, debts or credit cards works, as well as understanding inflation and its impact on the rising cost of goods and services. All of this can be part of getting the next generation and the next more equipped and financially literate.
Beyond the practical aspects that a foundational financial literacy base can provide young adults, I see it having broader psychological significance and being part of the remedy to financial anxiety. The anxiety appears to come from two places, the taboo nature of talking about money and the general worry - not knowing what to do or if you’re doing the right thing. Not only are we unsure but we also don’t talk about it. That doubling down is not physiologically helpful. Teaching about money can help with both especially given the rising rates of anxiety within our young people today.