I’m thinking that a financial education has lots in common with sex education. Some people think that it should be taught in school, others say that it’s the responsibility of parents to educate and schools should leave it well alone. Some people feel strongly about abstinence in sex education, and some people feel strongly opposed to credit in personal finance education.
Of course there are some differences. One of the best ways of teaching kids about personal finance is to have them watch their parents… Yes, you really can only stretch an analogy so far.
and there’s a point to this?
If we’re taking a strictly outcome based approach, the Netherlands is particularly good on sex education. Rates of teenage pregnancy are some of the lowest in Europe, and teenagers wait for longer before having sex. Now, the Netherlands is pretty liberal, and you might not be comfortable with some of the things that they teach the under 11s about sex, but the really important thing that they do is focus on relationships, values and self-worth with the mechanics being taught but with less emphasis. As a result people (that pay attention and learn in class) are more likely to make decisions that benefit them in the long run.
Really I think we can learn something about personal finance education from this approach. The mechanics of budgeting, and how credit cards work, and how to balance a cheque book are important, but nowhere near as important as organising your finances are around your goals, and the life that you live. It’s really helpful to understand the rules around RRSPs or ISAs or Roth IRAs, but it’s even more important to understand how risk works, and the sort of risk profile that you have at the moment. Or to work with yourself to get out of debt, rather than embarking on a plan you won’t stick to.
Personal finance education, is a bit like sex education!
- personal finance education for England
- not a money script: investing
- how should kids learn about finance?