Been hearing a lot lately about “financial literacy” but I got an email recently that confused me a bit.
It was from a guy named Vince Shorb, who is the president of the National Financial Educators Council.
The NFEC had some startling things to say. For example, “In the coming decade, it won’t be enough to teach kids how to read and write. If they’re not financially literate, they’ll be lost.”
I wasn’t sure what they might mean by “lost,” but in any case they made it sound like it was something new.
Almost certainly the financially illiterate always have been and always will be at risk to end up broke.
When was there ever a time that people who didn’t mind their finances were not prone to have financial difficulties?
Vince also claimed that financial illiteracy was one of the main reasons college grads move back in with their parents after they get their degree.
Here’s what he said: “Living independently is getting more difficult with each new generation of graduates, and one of the key problems is that we aren’t equipping these kids with a good sense of how to run their finances.”
Say what, Vince?
First off, most college students essentially live off their parents the whole time they’re in school. These students don’t want to live independently. What they want to do is drink beer and socialize with other college students, preferably of the opposite gender, and get someone else to pick up the tab. Who could blame them. It’s a great way to live!
If they don’t have “a good sense of how to run their finances,” it’s because they’ve had no need of such good sense. So, when they graduate, what else would they do than move back in with mommy and daddy?
Some of the other gems of wisdom that Vince and his organization offered: “Today’s youth are not focused on just ‘money.’ It’s what money ‘allows them to do’ that motivates our children to pick up financial literacy skills.”
No kidding? There may be people, young or otherwise, who are motivated by simply running their fingers through wads of cash and coins like Scrooge McDuck, but I haven’t met any.
Sorry, Vince, today’s youth, and even the day before yesterday’s, are pretty much the same in that regard.
Or how about this one: “A simple financial literacy lesson, like a practical understanding of market cycles, gives them the knowledge of how to take advantage of future trends…”
Who could argue with that? The rub comes when one tries to make a “practical understanding” of market cycles “simple.”
Oh, sure, it’s pretty easy to convey the idea that markets go up and markets go down, and it’s a good idea to buy when the price is low and sell when the price is high. But figuring out the timing is anything but simple, and that’s the way it’s always been. If Vince can accurately predict those cycles, he’s got a bright future, indeed.     
He concludes with this sobering observation: “Let’s face it,” he said. “The next generation will be without the advantages of pensions and Social Security to protect their futures. If we’re going to deny them those tools, we should at least teach them how to better manage what they earn.”
Seems to me that there is a very simply way to teach that.
It can be summed up very succinctly and it is quite memorable. It would fit on a tee shirt quite nicely: “If you don’t work, you don’t eat.”
As Vince said, it’s not money they’re interested in, it’s what money lets them do. -RB