Freakonomics on Financial Literacy

**mjfrombuffalo**[$] · #1 07-25-2008, 01:18 PM

Great blog article on fiancial literacy - what is it, who has it, how do we get it, how can we get it to others.

It includes a three-question quiz, which I'm betting most people here would pass.

Quote:

Stephen J. Dubner said

I’d like to think I’m at least adequate in taking care of my family’s finances and everything that includes in the modern world: real-estate and insurance decisions, saving for college and retirement, investing and tax planning, etc. But it has been a bit of trial-by-error mixed with trial-by-fire ...But here’s my point: I’m not exactly undereducated. I had 13 years of public schooling, 4 years of college, and another 2 years of graduate school — and after all that schooling, I don’t know if I learned enough to answer all three of Lusardi’s questions correctly.

magenta321 · #2 07-26-2008, 10:08 AM

I know I will be crucified for this, but I wish there was more in school about how to understand financial math than many other forms of math.

Everyone will own a credit card, or at the very least, a savings account (unless they're such criminals that they cannot have either, 'less they want the guvmint to know how much money they gots). Everyone should be able to understand what a credit card with 21.9% and a charge of $100 is going to mean... and what happens when you carry that balance. But no one learns that in school. So who teaches kids this? I think I learned by seeing my credit card statements over some months when I was in college. That's kinda too late.

While many people will need geometry, algebra, and advanced applications in math in their life, I have not. So all three years of math in high school were wasted time. At least some of that time could have been devoted to teaching math that has real-life applications.

Since one math is used by nearly all students, and another math is used by only some students, wouldn't it make more sense to devote more time to the math everyone will need?

It really wouldn't take that much time to teach kids this stuff. They already have to learn percents, they learn decimals, they learn to add, subtract, multiply these things... so why not teach them financial math?

Are we just assuming that since they learned these simple skills that they'll realize how to apply it in real life situations?

Also, isn't that the point of school, to teach children to prepare them for their adult life?

We take the time to teach kids poetry so they will have an appreciation and an understanding of it later in life, even though they may never use poetry again. That's great. But we also take time to teach them life-skills in English, like writing a business letter. I think that learning how to use geometry and algebra is more like poetry, a skill used by some, and it's nice to understand it. I think financial math is more like being able to write a business letter -- a skill everyone should have.

**Prepoia**[$] · #3 07-26-2008, 10:57 AM

I agree. The best math class I ever took was called Consumer Math. It was based on math used in daily life and I learned and used more of that content than any other college preparation/higher math class that I ever took. I had used up my math credits in high school and was a senior looking for an elective and took this class. The other higher math classes I took I needed for college classes (and very little else in life.) Higher math classes teaches more about "how" to think than "how to use daily". There's a place in our lives for both. But, school districts want to brag about their accelerated math prowress in competitive times like these and they seem to care very little about the high numbers of students that never actually complete college. Therefore they don't spend needed funds to teach kids to actually "live" in the world. In our district, they are now required to take four years of higher math etc and there is very few electives offered or very few kids that can afford to take an elective because of all the credits (I think it's 24 now) that they need to pass for graduation from high school.

*emeleel* · #4 07-26-2008, 11:18 AM

I've heard of schools starting to offer "Life Skills" classes that include things like Consumer Math, but it seems like it's a really slow growth. There's just too many other advanced classes that they've got to offer to have room for stuff like that.

You can bet I'll be doing Life Skills with my two, I'd be doing them a great disservice if I didn't. Budgeting and consumer math will be a huge part of that.

**mjfrombuffalo**[$] · #5 07-26-2008, 11:39 AM

Margaret, you're saying pretty much what the Freakonomics guy said in his blog about the need to educate kids on personal finance math

We had "business" class in Jr. High that taught us financial math - economics and personal finance, like how a checkbook works, what's compounded interest, etc. It was one of those mandatory classes.

nc10 · #6 07-26-2008, 05:30 PM

Quote:

magenta321 said

Everyone should be able to understand what a credit card with 21.9% and a charge of $100 is going to mean... and what happens when you carry that balance...........

While many people will need geometry, algebra, and advanced applications in math in their life, I have not.

Solving the relationship between interest rate, amount charged and time is algebra, isn't it?

frazzledspice · #7 07-27-2008, 10:39 AM

I agree absolutely, Margaret.

But when I wrote a post last year about my daughter, a college Music major, wanted to take more fine arts in high school instead of a fourth year of Math, I was crucified for supporting her.

I would have approved of the fourth year of Math if she were learning practical skills.

magenta321 · #8 07-27-2008, 11:03 AM

Not by me, Fraz

I was the kid who had no lunch and no study hall so I could take more classes. I had the best electives: child development, business study (I forget what it was really called, but we ran a greenhouse and sold things we grew, as well as making commercials, webpages, etc for our business), Ecology, Choir, World Religions, etc. I wouldn't have given up any one of those classes, they were all so valuable. I never got to take an art class in high school because there wasn't enough time for that, but I would have loved to! I would have gladly given up a year of the math I didn't use for art instead. I do feel like I missed out there. I didn't have any free periods to put another class in I would have taken much more.