Monday, May 17, 2010

It's About Time, Tim!

Timothy Geithner, the man notorious for his role in Tarp, has conducted a study entitled "FINRA Investor Education Foundation's National Financial Capability Study" to figure out what I already knew:  Young people are horrible with money. Most do not save and many are incapable of making financial decisions.  This is evidenced by the many people that read BIDER that decided that law school was a cost-effective decision:
Few are able to perform basic interest calculations necessary to compare the cost of a loan or to figure out how much to try to save. On just about all measures, the study found young adults are the least money-savvy.
As a result of this study, Geithner and the U.S. Government have decided that student should be receiving some sort of education in personal finance. I think this is a brilliant idea. It's been done in schools such as Stone Wall Jackson High School in Manassas, Virginia where "teacher Terri Carson helps students manage the student-run credit union and includes a financial literacy boot camp in all her classes."  I am advocating a class that simply teaches students not to buy things when they don't have the money to do so. I imagine teenagers today will be worse off than our generation.  My parents didn't have a home equity loan on the home that they used like an ATM card.  Today, up until the Real Estate Bubble exploded, kids witnessed their parents furnish their homes, buy cars, pay for vacations and buy yet more homes with their home equity.  I am not convinced that today's teenagers have been told to do without.  I was constantly denied EVERYTHING... including assistance with college tuition.   Can you tell that I'm bitter?

We hope to see more locally driven efforts to make youth financial education a priority in schools across the country. At the same time, we'll be doing our part at the federal level. In our schools, we will promote a well-rounded education that includes financial literacy. We will give consumers the information and education they need to make smart financial choices. And we will work to provide all American families with access to the bank accounts they need to manage their daily finances.
The agenda is clear. Let's pass serious financial reform. Let's promote financial access. And at the same time, let's make sure that we are providing all Americans -- especially our youth -- with the financial education they need to succeed in this increasingly complex, fast-moving economy. Their futures -- and ours -- depend on it.
 The conspiracy theorist in me suspects that this is a plot to make young people into smarter consumers, which will perpetuate our consumer driven economy. I hope that the education has a focus on saving and investment more so than calculating interest on credit cards and student loans.  But I am not going to hold my breath.  This is how my class would go:

Don't Buy Stuff

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1 comment:

  1. One of the most useful courses I took in law school was federal income tax. The next is Business Associations. People get so caught up in trying to engage in Oprahfication that they think that the cure to world poverty is to dump a box of Jane Austen books and Mozart CDs on the feet of people who are starving in the desert. Seriously, you need to know how to do your taxes and you need to have some sort of inkling of what it means if you decide to create a joint venture with two of your friends from law school. Stuff like Criminal Procedure sounds nice, but its fairly useless in the face of the local rules.



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