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Tuesday, July 8, 2014

Unprepared for the "Real World" - Money

I was lucky to grow up in an area with good schools.  I've always liked learning, and I had plenty of opportunities to learn new and exciting things.  Despite that, I find myself clueless out in the "real word" quite often.  Based on my experiences, there's a couple places where schools could make some huge improvements, two examples of which are education about food and money.  Maybe your schools did a better job teaching these than mine, or maybe the responsibility should be more on parents, but regardless of where the problem is, this is something that needs to be addressed.

Let's just focus on money today.  In my high school, we were only required to take a half semester of econ.  The class I took to meet this requirement had a project where we were assigned jobs and salaries, and had to make a budget based on that.  We learned to fill out a check.  We played the stock market game for a couple weeks.  Bam, econ requirement finished.  We never talked about how to make a good budget - this ended up being me blindly guessing at how much things like health care, utilities, and groceries would cost.  We never talked about how to invest in stocks in the real world, let alone the different ways to invest in stocks.  We never talked about how you save money for retirement.  Sure, there was the "try to save 10% of your salary," but where should you put that money?  And what about taxes?  Nothing.

I have a steady income now, so I should know something about money and what to do with it, but I don't.  I'd throw some extra money into my savings account every now and then, and the rest would just sit stockpiling in my checking account.  Saving for retirement?  Uh sure, that can be my savings account, but more likely I'll just need to work for the rest of my life just to get by.  Stocks?  Those are scary and only rich people buy them, right?

I don't expect schools to go crazy in depth with all of this, but why not even mention that there are different kinds of retirement accounts?  Not a word was said about IRAs, let alone Roth vs. traditional.  What about a pension or 401k?  Why not give a brief rundown of different types of accounts, and when they're relevant.  Why not explain that it's stupid to get a savings account that only give 0.05% APY?  I don't think that's too much material to handle.

And while you're at it, why not explain that picking individual stocks is really no different than gambling?  Or that mutual funds are not any better, except you're paying people to gamble for you?  But there are actually ways to invest in the stock market with relatively low risk, did you know?

What about a class period spent talking about credit cards and how to use them intelligently?  A day to discuss different types of student loans?

I've been trying to learn more about money and how to spend/save it responsibly in the past couple years, but this shouldn't be something you only start learning after you turn 22.  I'm still so uninformed about so many things, and each year I throw money around carelessly is a huge setback to my savings.  I spent years with that stupid 0.05% APY savings account and earned probably less than a dollar in interest total, yet I thought I was still ahead of the game because I at least had a savings account, and that's better than earning no interest in a checking account.

It would be fantastic if schools taught even a little bit about investments as part of the required curriculum.  But even if you're in my shoes, absolutely clueless about anything and everything money related, you can still do yourself a favor and learn about it independently.  Do your kids a favor, if/when you have them, and teach them about money.  I'm doing my best to learn, and I'll be talking more about my financial adventures in the future here.

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