More reasons to learn about finances
In the last column we listed the first three of my ten reasons to learn about personal finances, and to teach them to your children. There are many other reasons. These ten were just the first ones to come to mind. Here are the last seven.
1. You don’t want the poor management of your finances to prevent you from achieving not only your financial goals, but your career and life goals.
2. It is not about your Academic IQ, it is about your Financial IQ, and the two are not the same. Also it is not about how much money you have in life, it is about how you manage your money, and those two things are not the same either. You need to see the professionals in bankruptcy court (teachers, engineers, nurses, etc.), who have so mismanaged their money, and they had plenty of it.
3. People need to save more, and be better spenders. I believe that it was Einstein who said that compound interest is the most powerful force in the universe, and Franklin said a penny saved is a penny earned.
4. If you don’t budget and track and analyze your spending, in this hyper-consumer, keep-up-with-everyone society, your spending will control you.
5. The pandemic taught us a lot of things, but one for sure was that you need an adequate emergency savings account, because bad things happen to good people every day.
6. In today’s complex financial world, you cannot be in control of your life, unless you are in control of your finances.
7. The largest increase in bankruptcies before the pandemic was among Americans 65 and older, who did not save enough for retirement, and are, in many cases, still addicted to debt and living above their means.
Also in the last column we noted that as an additional employee benefit, more employers are offering a match for employees saving for emergencies, and that there are more possible government incentives in the works for Americans to create an emergency savings account. By the way, it is still nearly 40% of Americans who say they don’t even have a $400 emergency savings fund. At any rate, a reader reminded me this last week that I have often talked about setting up a match program for your children to encourage them to save, and save more. It doesn’t have to be a dollar for dollar match, and it can have a ceiling, annually or otherwise, but it works.
On a different subject, we are coming up on that periodic, “should we raise the national debt ceiling” series of events, with intense media coverage, notwithstanding the fact that we all know that Congress will in fact raise the debt ceiling once again, as it has over 100 times since 1980. When this time comes, I can’t help but picture many families, in this “debt-is-OK society,” negotiating to raise the family debt ceiling.
The whole idea, as we have discussed, is that for many Americans, debt is affordable if you can make the monthly payments — a cash-flow concept of affordability. Could it go like this: We can put our daughter in that expensive travel sports program, because she “needs” it, and we can increase our credit card or home equity debt, since we have some room on being able to make the required monthly payments. Like the federal government, which never seems to be able to find a way to cut spending on any of its programs, do families just look at whether they can carry more debt in order to be able to go on that expensive vacation next summer with friends, or buy that new car, without looking at whether they can cut something out of their spending? Just wondering!
On another subject, high schools are back in session, and some of the students are fortunate enough to be in schools that have that “Gold Standard,” one-semester, mandated personal finance class. Others are fortunate to have a personal finance class offered as an elective, and, as you know, I hope more students will take that elective class.
Next Gen Personal Finance has recently reported on the 1,584 high schools nationwide that are in its network and have that mandated one semester class. Below are the 16 school districts in New York State. Congratulations to the Rochester area, where there are six of the 16 schools! Next Gen and The CARE Program are very supportive of each others’ efforts to increase the financial literacy of young people, and I was privileged during the 2019-202 school year, before the pandemic, to make my financial literacy presentations in each of those six school districts.
The Next Gen list is not exhaustive, because the Sodus School District also has a mandated personal finance class, and I am privileged to speak there every year.
1. Akron High School (Akron, NY)
2. Bethpage Senior High School (Bethpage, NY)
3. Clayton A Bouton High School (Voorheesville, NY)
4. Ellicottville Jr./Sr. High School* (Ellicottville, NY)
5. Gates-Chili High School (Rochester, NY)
6. Jamestown High School (Jamestown, NY)
7. KIPP Academy Charter School* (Bronx, NY)
8. Mott Hall V (Bronx, NY)
9. Orchard Park Central School District* (Orchard Park, NY)
10. Seton Catholic High School* [Ind.] (Plattsburgh, NY)
11. Spencerport High School (Spencerport, NY)
12. Webster Thomas High School (Webster, NY)
13. Wayne Senior High School (Ontario Center, NY)
14. Webster-Schroeder High School (Webster, NY)
15. Wheatland-Chili High School (Scottsville, NY)
16. Windsor Central High School (Windsor, NY)
Considering that there are 66 schools on the list in Illinois; 159 schools in Iowa; 140 schools in New Jersey; 159 schools in North Carolina; 166 schools in Ohio; and 177 in Wisconsin, it is clear that New York has a long way to go.
In the next column we will look at some of those October national dates that you might want to celebrate.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.