If personal finance aficionados were in charge of the world, a LOT of things would be different. You guys have no idea.

First, we’d all have separate savings accounts for travel. This would be mandated with all the enthusiasm of Brad Lamb shilling his latest condo development. The vacations wouldn’t *have* to be exotic, but you’d get mocked endlessly if you spent your travel fund  going to Saskatoon.

Secondly, we’d all churn credit cards to get reward points, but only once our debt was paid off. Because, obvs. Y’know, see point one.

Thirdly, we’d have weekly meetings about balance, all while tracking our net worth monthly to the penny. We totally wouldn’t get the irony in that.

And finally, we’d make personal finance education mandatory for all youth, starting them off at the ripe ol’ age of six. That seems like waiting long enough. STOP PISSING YOUR PANTS JIMMY, IT’S TIME TO COUNT QUARTERS.

On the surface, personal finance education in high school seems like a good idea. They’ll be heading out into the real world soon, and need to know about budgets, credit, taxes, investing, and the big one, student loans. Increasingly, our teachers are taking time to teach kids this stuff.

Back around the year 2000, I was in high school. And we learned this stuff. Admittedly it wasn’t much more than a couple weeks worth of coming up with imaginary budgets and amortization schedules, but we learned it. And that was a million years ago.

God, I’m old.

Admittedly, I don’t have an in-depth look at my former classmates’ financial picture — hell, I can’t even stalk on Facebook, since I quit it like five years ago — but I’m willing to bet that, collectively, they ended up pretty much the same as people who didn’t learn any personal finance education.

Why was it a failure?

Was it because we didn’t spend much time on it? Maybe

Was it because teachers, as a group, aren’t really that good at it? Maybe

Or was it because high school students largely tuned it out because they don’t deal in the real world? We’re getting warmer

As just about every single high school teacher who had me in grades 11 and 12 can attest, it’s hard to teach people what they don’t want to learn. I had mentally checked out of school, and I was working close to full time at my after-school Dairy Queen job. I barely did my homework, and was kind of a lippy little jerk.

But I did well on the personal finance education test. I got 100%. Most everyone in the class got above 85%. Because, as I’ve stated a million times, this stuff isn’t very difficult.

So why do students do okay in personal finance education in a classroom, but not in the real world? It’s because they just don’t care. When you’re a student and you don’t care enough about the subject matter to do anything more than pass the course, I guarantee that knowledge is going to be more gone than my entire grade 12 calculus class. BUT I PASSED, SUCKAS.

And I think I have evidence that my theory is correct.

According to this article from the personal finance section of Vox (presented by Discover!, also without irony, apparently), students in 17 states must take fairly complex personal finance education before they are allowed to graduate high school, with only six states actually testing them on it. After finishing their course, each student was presented with a quick test, consisting of such difficult questions as:

  • Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow: more than $102, exactly $102, or less than $102?
  • Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?
  • Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

I’m not saying the answers. If you don’t know, log off and leave this blog forever.

This quick test is commonly used to figure out whether kids know anything about personal finance. Nationally, in the U.S., just 27% of high school kids got all three answers right. You’d think students with personal finance education would do better.

You’d be wrong. They did about the same.

If that’s the case, why spend money on personal finance education anyway? Perhaps it would be better spent on college students, or increasing funding to higher education to ultimately lower tuition. Like that last one would happen, but we can dream.

Has personal finance education been around long enough to declare it a failure? I don’t think so. But I continue to insist that it isn’t the magical answer to all the money problems that kids get into. We push college at all costs, get constantly sucked into traps because of psychology, and show kids crummy examples by doing stuff like financing cars because we want something shiny, spouting some crap about reliability.

Do you really think that a semester in school taught by some teacher who’d rather be playing games during his spare is really going to make a difference when stacked up against that? And when stacked up against kids who don’t really give a crap about learning this? I doubt it.

The problem of kids not knowing basic personal finance stuff is real. Teaching it in school seems like the best way to fix it. It’s not. I wish I could come up with a better way, but I can’t. All I know is the way we’re doing it isn’t working. So let’s stop it and do something else.

Tell everyone, yo!