Too much, too Little, Makes us wait
Proponents for school-aged financial education suggest that introducing financial literacy at an early age has a direct effect on a future clear of debt and greater retirement plan activities. The government developed websites right away: mymoney.gov, moneyasyougrow.org, and moneyasyoulearn.org. The Treasury Department and the Federal Deposit Insurance Corporation also offer learning materials.
Whether or not to include studying compound interest in a personal finance curriculum is ultimately determined by each state and their school district. There is no agreed-upon design to ensure uniformity at any of the school levels, but numerous programs are in effect. A bombardment of material is stifling curriculum standards. According to Dan Kadlec a personal finance journalist for TIME, “examine the myriad of choices, settle on the best programs, duplicate them, and get rid of everything else.” The paradox of having too much and doing nothing is not serving anybody.
In a New York Times article called Financial Literacy, Beyond the Classroom, journalist Richard Thayler wrote about results from a new meta-analysis that doesn’t oppose current information but sifts through 167 other studies to come up with simpler solutions to transmit complex financial data. Three Ph.D. university professors, Daniel Fernandes from the Netherlands, John Lynch Jr. of Colorado, and Richard Netemeyer of Virginia say students forget as much as they learn, and financial learning correlates with levels of education in general. Offering remedial learning as students need it, instead of giving it to those already advancing their learning journey can bring students greater understanding than an entire course. He offers three other tips.
Professor Lynch calls for just-in-time education to serve students better because over time students have to be reminded of what they forgot. Providing objective information just before a decision is made is the cure for a high school senior thinking about a student loan just-in-time. Make sure the job for which they make a student loan can pay the principle. Just-in-time education can be offered when taking out a mortgage or figuring out when to retire. Because these courses are not mandatory, the people who need it most will not take them. As consumers, the most vulnerable may not get the best advice and predator industries with their own motives, do not supply objective information.
Simple rules are more natural for most to remember than complex stats: Invest as much as you can in your 401(k) plan, save 15 percent of your income, or get a 15-year mortgage if you are over 50. Something as simple as separating business from personal cash drawers helps entrepreneurs keep track of how their activities were going.
Simplicity is a company offering a default investment option that employees just sign up for, rather than try to pick their own portfolios. Companies engaging in fraudulent practices should be prosecuted. Unethical behavior should not be tolerated in the credit card industry or with bank checking accounts. The financial services industry needs to do their part in finding ways to make it easier for people to make sound decisions.