Gaining personal financial knowledge can be difficult. For many people their family didn’t discuss money growing up and the subject might have seemed taboo. Formal education often fails to address the basics of personal finance and some of the practical things one might need to know in order to make wise financial decisions as an adult.
Fortunately this is changing. According to this Marketplace Money podcast, Oklahoma is now requiring high school seniors pass a financial literacy test in order to graduate. The Council for Economic Education asserts that only five states require a stand alone course in personal finance in order to graduate. A shift is happening slowly but surely.
Education needs catch up with the changing times. Younger generations won’t be offered pensions and, instead, will have to make their own retirement decisions. Making choices in young adulthood like 401(k) contribution amounts and investment decisions, among many others, will be critical to long term financial success. David Kadlec on Marketplace Money also mentioned that other countries are setting the trends. The UK and Australia have personal finance education requirements.
Back to Oklahoma…this Oklahoman article includes a video where you can test your financial literacy. Here are a few questions:
1. What type of insurance protects a person for lawsuits?
C. Term Life
2. The HIGHEST percentage of income for people over age 65 comes from?
A. Employee benefits
B. Retirement accounts
C. Social Security
D. Other assets.
3. All of the following are major reasons for filing bankruptcy EXCEPT:
B. Failing to pay personal income tax.
C. Student loans.
For the answers watch the video. These questions have practical implications when it comes to personal finance. They are topics I address with clients and have written about elsewhere in this blog. I analyze how to mitigate risk on the form of umbrella liability policies and other types of insurance; discuss various ways to fund retirement and create a plan to pay off student loans.
I hope that more required curriculum, like the one in Oklahoma, will help Americans SaveUp!
This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.