Meeting the demand for financial literacy

My latest op-ed, title above, appeared in Wednesday’s Virginian-Pilot.

There are so many pieces missing from the education of a lot of folks about economics and finance. I cited three instances at the beginning of the column but the truth is that I see so many more. Part of the issue stems from the increasing complexity of our financial options, but the other part stems from simply a lack of instruction.

The 30-something that I refer to came to see me because her father, a client of mine, felt ill-equipped to discuss this with her. After all, he was old-school. He hadn’t had to plan for retirement, because his job had provided that for him. His kids weren’t so lucky; with the advent of 401(k)s, they had to make their own investing decisions.

A more recent conversation this week points to the continuing difficulty. Trying to explain short-term versus long-term investing took a while, as did trying to explain the risk/reward nature of investing.

Forget investing. A few months ago, I was talking to one of my nieces about her graduate school. Seems she was going to spend $80,000 to get a masters degree, because the classes were convenient. I asked how much more money she was going to make with it and she said $2,000 a year. Um, that means a 40-year payback, not including interest. She hadn’t thought about it in those terms.

We turn folks loose without a basic understanding and expect them to be successful. You simply can’t get there from here.

So the financial literacy requirement is one that I hold dear and one that I’m glad the Virginia Board of Education has made as a requirement of high school graduation. Perhaps these kids will enter their working years better prepared and will make better decisions.

 

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