Earlier today I ran across an interesting article over at Time/Moneyland. In it, Fed Chairman Ben Bernanke was quoted during a Federal Reserve Town Hall Meeting as saying that:
“My best guess is that our kids will be better off than we are.”
But that optimistic view was accompanied by concerns over financial literacy and the need for our children to take on greater personal responsibility for their futures.
Honestly, though I agree that a solid financial education is incredibly important, I think it’s silly to suggest that there will be a unique need for this in the future. In truth, there is a great need for it right now.
Who knows… Perhaps Bernanke thinks it’s too late for the current crop of “responsible” adults and is therefore hoping that the next generation will do better.
Either way, his view is that:
“Financial education supports not only individual well-being, but also the economic health of our nation. As the recent financial crisis illustrates, consumers who can make informed decisions about financial products and services not only serve their own best interests, but, collectively, they also help promote broader economic stability.”
I couldn’t agree more. And yet… What are we doing about the problem? While I’ve heard all kinds of talk about the importance of financial education, I’ve seen very little in the way of action. The closest that schools in our area have gotten to tackling the problem has been to run a semester-long stock market competition, which (imho) is completely antithetical to good financial practices.
What do you think? Will our kids have it better than we do? And do you think we’re doing enough to promote financial literacy in American society? Looking forward to hearing your thoughts…
I think it’s crazy that most college graduates graduate and start working and have absolutely no personal finance knowledge. It’s crazy how many of my friends didn’t know what their 401k was investing in until they found out I had a PF blog and started asking me questions.
Kurt has a good point. Flexo over at Consumerism Commentary also commented about Bernanke’s town hall. He highlighted an aspect I think is important: structuring the education in a way that involves parents.
If you read about how poorly prepared today’s retirees are, you can see how crucial it is to get this right. Here’s a recent survey by the AARP: http://www.aarp.org/politics-society/government-elections/info-08-2012/aarp-2012-voter-survey.html
We need all the education we can get…
I think our kids will be worse off, but not because of financial illiteracy. They’ll be worse off, and probably not even recognize it, because they’ll voluntarily tether themselves to electronic gadgets and social media instead of actually doing something and spending quality time with people. If you want to see a funny and vivid 30-second illustration of what I mean, search YouTube for Toyota Venza: Social Network. Hilarious.
Nickel,
At a relatively young age I was fortunate to have stumbled upon some books on investment basics. Putting those long-term investment principles into practice changed my life, allowing me at age 35 to finance the start-up of my own business.
Particularly in today’s economic environment, I’ve been very concerned to speak with so many young people who have never even been exposed to these principles. I decided to write a book that I hope, at some level, might improve the situation. It should be release next week:
http://moneyforsomethingbook.com
The aim of the book is to be short and concise, but nail home the idea of the power of long-term compounding, and a program of disciplined savings and investment in a sensible allocation as the vehicle to take advantage of that.
(Nickel, I’d love to send you a review copy. I tried to contact you via your contact form, but didn’t receive a reply. Just wondering if that got through.)
Unfortunately I feel that many people have to learn the hard way. There were a lot of people before the housing crisis who were talking about the dangers of high-risk mortgages, but did anyone really listen? I think in times of hardship people learn some of their best lessons. However, it’s still very important to have financial education be the top priority in our high schools and colleges . . . some will listen.
I think our kids will be better off than us, but I don’t think we do enough financial literacy education. Part of the problem is you can teach it but if the students aren’t willing to accept it the education is a lost cause. People don’t want to learn for the most part until they’re in trouble as far as it goes for finances I think..