A statistics professor in my MBA program made a statement on the first day of class, "I can train you how to be a $10 calculator, or I can train you how to think." Obviously, gone are the days of living without smart phones, auto-correct and calculators.
So why are we still teaching personal finance as textbook terms and definitions? Why are we spending time on the things that students will inevitably forget; more importantly the things that they can easily look up on their phones? (Please Note: We do worry about many students' capability to spell and do simple math, but that's why we created Andson Academics).
We need to teach them that knowledge equals power. When faced with questions about IRA accounts, APRs or the details of an annuity, do some research on Google, instead of believing the salesman. We need to be able to instill that delayed gratification and PYF (pay yourself first) gives them spending choices and spending power.
Behavioral Finance is the term that is gaining ever-so-much momentum right now in this field. That is, instead of teaching a student about textbook definitions, let's teach them how to think about finance.
- What should I be leery of?
- When does an interest rate raise a red-flag?
- What are the fees that will be involved?
- Where can I go for help outside of a payday loan?
All of these are examples of teaching young people how to think about their money. Time Business & Money has a great article right now on the concept of changing behaviors instead of just teaching facts. We couldn't agree more and in fact pride ourselves and our programs on providing more than just a workbook or worksheet.
Roth, who runs the infamous blog Get Rich Slowly admits that he himself learned all the "basic financial literacy," in his senior year of high school, but was no better because of it.
Roth goes on to say that personal finance is something internal for most people - though for many there is definitely a cycle of poverty they need to overcome. What needs to be taught is that in order to make a change, it needs to happen within us. Otherwise it's just like a fad diet - you always end up back at square one.
I myself cannot begin to count the amount of times that we see young people that just don't want to end up in the same debtor situations they've seen friends or family end up in. Many times that's enough and it works. More often than not though, one is the sum of their surroundings; so bringing a fresh way of thinking and perspective into the classroom is more important than ever.
Let's continue with a mission to change behavior in our students, and not just make them calculators and dictionaries when it comes to personal finance.
Sources:
Time Business & Money
http://business.time.com/2013/03/11/why-financial-literacy-fails/
JD Roth
http://business.time.com/author/jdroth/
Get Rich Slowly