Teaching young people about money

August 3 2009 by Ellen Roseman

My husband thinks Latin should still be taught in school. I think studying a dead language is helpful for a few, but learning about money management benefits everyone. So, why don’t schools integrate it into the curriculum?

Kids today are assaulted with TV ads as toddlers. They’re offered credit cards when they hit puberty. They’re easy prey for hard-sell fitness clubs and cellphone contracts in their teens. And when leaving high school, they’re burdened with student loans they may not pay off until they’re middle aged.

Parents don’t always train their kids on handling personal finances — and even if they do, kids follow the behaviour they see. Many parents are terrible role models.

I’d like to see schools take up the challenge of teaching young people not just to earn money, but to make it last. I talked about this in my Sunday column and heard lots of interesting comments from readers.


  1. MG

    Aug 3 2009

    Thank you for covering a very important and completely neglected topic: the financial education of our youth.

    As a high school teacher who has taught economics and general post-secondary preparedness to grade 12 students, I find most are completely shocked to understand how debt functions.

    The greatest consternation stems from the basic concept of amortization, where the lender is paid the bulk of the interest costs up front.

    I demonstrate to students how, over the lifetime of a loan, as much as twice the original amount can be paid out; and, in the case of a mortgage where the life of the loan is much longer, one must hope that interest rates are stable or declining over the life of the mortgage or the final sum paid could be substantially higher.

    Therefore, a borrower is actually making a call on the direction of interest rates when they arrange any form of loan.

    I then ask students to explain what are interest rates and how they function, and I’m usually told that it’s the government that handles them. Although partly correct (short-term rates), there is little understanding of the market forces that dominate longer-term lending.

    They also do not have any understanding about what makes these vehicles rise or fall, and what are the related economic causes and consequences for such changes.

    It is safe to say that borrowing is a required feature for many journeying to post-secondary institutions, but many are committing to debt arrangements about which they don’t have sufficient understanding, especially concerning how interest rates affect their debt commitments.

    Moreover, there is very little comprehension of other important economic variables about which one should have some awareness such as inflation, cost of living, investment and retirement savings.

    Today’s pedagogy, so rooted in the everything-has-to-be-fun Dewey school, seemingly has no place for economic education; after all, economics is known as the dismal science.

    But imagine a school system that did not advocate a scholastic regimen consisting of reading and writing. Sheer folly, right? The need for both is universal and both are critical agents for survival.

    But why is financial literacy seen as something optional and private by our school system?

    Without any prescription today, it is entirely possible for a high school student to fly through the system without ANY economic education.

    A generation of students, all participants in the financial realm, with no knowledge… how does that bode well for the economic stability, general standard of living, and personal efficacy of our society?

    This is a vital issue for our community; thank you sincerely for addressing it.

  2. PW

    Aug 3 2009

    Hi Ellen. I am doing some research for my son and came across your article.

    Nearly 3 years ago, my son had minimal to no credit and had only worked for his employer for 6 months. He went to buy a truck from a local GM dealer. I went with him after he had verbally made the deal.

    I knew he might have trouble securing a loan so I was prepared to co-sign and I have an excellent credit rating and plenty of assets.

    The fellow who “takes care” of the poor folks who can’t get financing was very smooth!! He had all the answers.

    He told us that even with me co-signing, my son could not get a better rate than what he could get with Americredit. He said he tried all other banks and only this place (which I had never heard of) would approve my son’s application. It seemed sketchy to me, but my son was over 20 and wanted to be independent.

    I wish I never would have let him sign this deal!

    Now, he has been with the same employer for nearly 3 years and has almost completed his journey person training as a mechanic. He wants to get rid of this truck.

    He looks up the amount owing with Americredit and sees he has barely paid anything. He’s furious (but lesson learned!). His interest rate is more than 20%. He owes about $19K and the truck is probably, if he’s lucky, worth $15-16K.

    So, if he sells the truck, he’s still left owing $3-4K for something he doesn’t have. DO you know what the recourse is if he “gives” the truck back? Do they keep him on the hook for the amount owing above what the truck’s value is?

    I can’t see him being able to just walk away. I have read the contract but I think we’d need to hire a lawyer to understand it!

    They really take advantage of people in vulnerable situations and this should be illegal, but there are always people who need this help, I guess.

    He is making an appointment to meet with a bank about trying to get out of this with a loan or line of credit.

  3. JS

    Aug 3 2009

    For the last few years of my teaching career, I was assigned several Grade 11 (16 year olds) classes under the course description of “workplace math”.

    The aim of the course was financial literacy — renting, budgeting, purchasing cars and homes, the real costs of financing, doing your own income taxes and so forth.

    It was a compulsory course for graduation, as everyone has to take a Grade 11 or 12 math course to graduate from high school.

    I taught the course 5 times. A few took it seriously, but most did not. All I could ever say to myself was “one day, you will thank me”.

    It was a course that I wished I had been made to take when I was in high school, as many of us [myself included] find out the hard way.

    Calculus and advanced functions do not make you financially aware!

    The last word is, it’s the same old story of leading the horse to water. No matter how much opportunity is out there, most people, I regret to think, will continue to be financially illiterate.

    After all, Canadian history is compulsory, but that does not make us much more aware — when so many of us think the Prime Minister is elected!!! BUT: this initiative is at least a start.

  4. Mark Beckles, Junior Achievement

    Aug 3 2009

    Organizations like Junior Achievement aim to do precisely what you are suggesting and in fact, we reach (JA Central Ontario alone) nearly 75,000 students annually through a suite of programs designed to teach financial literacy.

    Nearly 5,000 volunteers deliver these programs to middle and high school. And their employers graciously allow them the time to participate in what is a very important exercise.

    Corporate partners of every size, along with independent volunteers, help us achieve the goal of teaching kids “money sense”.

    What we need is more partners who are willing to work with us, as well as schools that recognize the impact of these programs.

    We need ALL levels of Government to recognize that this issue is a priority and needs to be part of a national strategy to teach kids financial literacy.

    We also need more Ellen Rosemans who can advocate on this issue because it is critically important.

    Simply put, if kids are to avoid the same financial perils that way too many adults find themselves in today, we’ve got to equip them today with basic financial concepts as part of an education continuum focused on financial literacy.

    It’s good for Ontario, good for Canada and it prepares our kids to be better prepared to participate in the global economy, one that gives no quarter.

  5. Jonathan Chevreau

    Sep 17 2009

    Certainly, financial literacy should be taught in the schools: the earlier the better.

    I wrote a financial novel last year called Findependence Day that is aimed at teenagers and young adults, especially newlyweds, first-time home buyers and those who are just starting familiies.

    It also talks a lot about how money interwtwines with modern relationships: a bit of a financial Harlequin’s Romance.

    Here’s a link, http://www.financialpost.com/fd.

    My blog at http://www.wealthyboomer.ca has explored financial literacy and I “tweet” most days on Twitter as @JonChevreau, http://www.twitter.com/jonchevreau

  6. Anna

    Oct 15 2009

    Totally agree that teaching money management to teens is hugely important!

    I work for Neon MasterCard Prepaid Card, which is great for parents who want to teach their teens ways of managing their money. It’s one of the safer ways for your teenager to spend, with no chance of being overdrawn and barring adult store spending. It also allows your teenager to earn cash back when they shop at over 1,000 of their favourite stores online.

    If you want, please do check out the website for more information http://www.neon-prepaid-card.com/bgneon.

    There’s a great video explaining how it works too: http://www.youtube.com/watch?v=wHnO0rRRrrA