Americans of all ages are, on average, surprisingly ignorant of life’s basic financial realities.
One global survey placed the United States 14th behind Singapore and the Czech Republic when it comes to understanding credit card interest rates, debt, the economics of home ownership versus renting, the importance of saving and the value of workplace benefits.
That ignorance has contributed to the nation’s $11.5 trillion in consumer debt and the failure of roughly half the population nearing retirement age to have saved enough to do so while maintaining a decent lifestyle. Three-quarters of all American households report living paycheck to paycheck.
The next decade, if nothing is done, promises to leave millions of seniors in poverty.
So we applaud the recent effort by Rundlett Middle School, NHTI and the New Hampshire Federal Credit Union to teach financial literacy. The program asks students the kind of questions they’ll soon encounter when they begin dealing with student debt, rent, living expenses and needs versus wants.
The program is all the more valuable because it’s conducted on the NHTI campus. Young students get a taste of what campus life is like and the kinds of programs offered.
Most of the students arrive with a specific career in mind but few realize how likely it is that, once in a wider world, their aspirations may change. Most are at best naive about fiscal realities.
Two students, for example, said they plan to save money by going to the same college and, instead of living in a dormitory or apartment, renting a house on a lake. Wait till they see the rent on waterfront property, which pays a whopping premium in property taxes.
Students learn to ask key questions that many adults fail to ask when in the throes of consumer desire: Can I really afford to do this? What will the cost be in the long run? How much will I pay in interest?
Those are really important questions in a state whose students graduate with the highest average debt load in the nation, over $33,000 apiece. But when it comes to college, since graduates earn more than twice as much as those with just a high school diploma, the question becomes: How can I afford not to?
Fewer than half all states require that students in grades K-12 learn at least some financial literacy.
New Hampshire does a bit better: Its middle school curriculum includes the brief exploration of fiscal literacy.
A number of efforts also foster financial literacy. Perhaps chief among them is N.H. JumpStart Coalition’s annual FinLit 300 Financial Capability Challenge, a competition among high school students sponsored by Merrimack County Savings Bank, credit unions, fiscal advisers and colleges. The competition tests teams on their fiscal competency with questions about risk management, credit and debt, and other areas of basic financial knowledge. We congratulate this year’s winning team from Merrimack Valley High School.
Fiscal competency is an often overlooked requirement for a happy, more secure and less stressful life and old age. It’s a subject schools at every level should make a mandatory component of a good education.