Greg Peck: Is your teen savvy about finances?
A new report by the Organization for Economic Cooperation and Development suggests many American teenagers lack financial literacy. Teens in the U.S. ranked ninth when compared with those in other countries. Nearly one in five American kids lacks basic proficiency.
The country at the top? China. That, too, should be no surprise. After all, U.S. math and reading scores consistently fell below international averages in the organization's previous assessments, while China performed very well. The organization said there's a strong correlation between math and reading proficiency and financial literacy.
The Milwaukee Journal Sentinel noted that the state Department of Public Instruction reported last September that less than half of Wisconsin's public school districts require courses in personal finance. Gov. Scott Walker announced in May that the state would dole out $350,000 in grants to boost financial literacy.
Why should it matter? Well, young people are increasingly responsible for making their own decisions on complex topics, everything from student loans to retirement planning, Walter Hamilton of the Los Angeles Times reported.
I'm thankful for having taken a personal finance course in high school and an economics course in college. Those, as well as seminars on retirement planning that I attended in recent decades, have served me well.
The classes encouraged me to create a budget, and I have followed one all these years. I might not always be able to stick to it; inflation and “wants” sometimes exceed available money, but that budget still has guided my spending habits. I've never paid a dime of interest on credit card debt. I've put money away automatically from every paycheck, and I'm reasonably optimistic that my wife and I will live in financial comfort when I join her in retirement.
Maybe we've just gotten lucky in that we've both had decent jobs that afforded us a reasonable lifestyle. But the financial education I received as a teen and young adult helped, as well.
If your child's school doesn't offer a class in personal finance, ask why not. If it does, push your teen to sign up.