Most high school students would jump at the chance to take a course called "How to Retire Early as a Millionaire."Forty states include personal finance to some extent in their educational standards or guidelines, according to the National Council on Economic Education. On the surface, this makes it seem that educators in most states realize that high school grads should have a basic understanding of personal finance. If you dig a little deeper into the numbers, you'll find this is not the case. The actual implementation of personal finance into high school education is dismal. Only nine states require a course with personal finance content to be offered and only seven states require students to take a personal finance course in high school to graduate (Georgia, Idaho, Illinois, Louisiana, Missouri, South Dakota and Utah). If you are looking at real-world life and what it takes to get ahead, what you do with the money that you earn when you are young can determine whether you live your life financially secure or paycheck to paycheck. After graduating and beginning to work is when people should be making quality personal financial decisions, not when they should begin learning how personal finances work. Here are eight subjects that aren't taught in high school:
1. Realities of Credit CardsLack of understanding of how credit cards work causes far more financial problems for people than should ever happen. Credit cards aren't evil, but they can seem that way if you don't know how to properly use them. When you already have a credit card is not the time to be learning how they work, unless you want to receive some extremely costly lessons. Teaching people in high school that using a credit card is not using free money and comes with a huge cost over time would keep a lot of people from the early personal-finance disasters these cards can cause. It would also help reduce the vast amounts of credit card debt that Americans continue to rack up.
2. How to BudgetOne of the first places people get into money trouble is not knowing how to budget. Not knowing how you spend the money you earn is nothing more than inviting financial disaster. Learning how to set up a basic budget and stick to it can be the difference between being financially secure and running up large amounts of debt.
3. The Importance of SavingThe importance of saving and creating an emergency fund cannot be overestimated for basic personal financial stability. It's not the everyday things that get most people into trouble, but the unexpected events that happen in life that cost more than anticipated. Learning to prepare for the unexpected can mean the difference between going into a debt spiral or escaping financial emergencies with your finances intact.
4. The Meaning of FrugalityIn the consumer-driven world, there seems to be nobody teaching the importance of frugality. Frugality is often ignored or even scorned, but it is a sure way to personal-finance success. Learning to make the most of what you have, to get a good value in all that you buy and to not waste when not necessary are lessons that would help every young adult handle their finances better.
5. How to InvestThe earlier people start investing for their future, the easier it is for them to reach their financial goals due to the magic of compound interest. Understanding the basics of investments and learning where they should be placing their money should be understood when they leave high school rather than having to experiment as young adults. The time to know about investing is before you have money to invest rather than by trial and error when receiving a paycheck.
6. Basics of Real EstateUnderstanding the fundamentals of real estate and how different mortgages work is extremely important as many are finding out with the current subprime mortgage meltdown. A good grasp of what is important when purchasing real estate and how different mortgages work rather than whether you can make the monthly mortgage payment at the time of signing it would have saved a lot of people their homes.
7. Retirement IssuesThe first step that any new employee should do when joining a company is to join the 401(k) plan they offer up to the match, since not doing so is essentially throwing away free money. Yet since high school doesn't teach this, many young adults do exactly this. If schools taught high school students how easy it is to become a millionaire if they only begin saving for retirement early through 401(k) and IRAs, many more would embrace saving and investing early.
8. Finer Points of EntrepreneurshipWhen it comes to financial security, putting all your eggs in one basket contains a lot of risks. In today's work environment, there is no guarantee of lifelong employment. Learning basic entrepreneurship and building a part-time business on the side is something that everyone should do for both the income and tax benefits. Schools should not only teach the basics to be able to work for somebody else, but also how to work on your own if you choose.
Since most high schools don't teach personal finance, those most in need of this education (those students with parents that have good finances are likely teaching them at home) are left to try and figure out this information on their own after they graduate. Some will succeed in learning and some will struggle, but all would be better off if they had learned it before entering the work force.