An Epic Fail In America

Financial literacy.  Period.  It’s pretty sad.  This article outlines the failure.  I think it is easy to point out the problems. It’s hard to solve them.

One of the reasons I am really excited about WLV’s investment in Holberg Financial is because we have failed in financial education in America.  If you are an employer and not talking to Holberg, you are putting your entire operation at risk because the odds are good your employees don’t understand enough about finance and a bad decision could put them in danger.

If you want access to their case study, click here.

Finance isn’t really fun to learn.  Making money is fun.  Spending money is fun.  Managing it can be drudgery.  Managing it means accounting and math. Statistics and probability.  Discipline.  Because we have failed at teaching finance at the JK-12 level, we open our entire society up to shills and hucksters.

From the article,

“financial mistakes are made every minute of every day. The consequences of those mistakes run the gamut, from being an annoyance (inadvertently choosing a high-interest credit card) to being financially ruinous (investing a retirement nest egg in what turns out to be a Ponzi scheme).

We teach our children to wear seat belts. Schools invest in programs aimed at helping kids practice smart internet habits. But few are talking about the dangers of too much debt or the blessing that is compound interest.”

78% of Americans agree financial literacy is a problem.  The bank I have used for years, BMO Harris, recently changed its website.  The new site sucks frankly and I am looking for a new bank. They got rid of all my transaction history, all my tags and all my ways to organize where money came from and where it goes.  It’s making this tax season a total nightmare.  Banks aren’t helping educate people and I don’t know if it’s because they just can’t figure out how to do it or cynically they know with an uneducated population they can sell more services to them.

We could require a high school course on personal finance, but frankly I don’t think that there is a population of teachers that could actually teach it correctly.  I have seen many high school teachers regurgitate old memes on economics and finance that are utterly untrue so I don’t have a lot of hope they will understand the principles of personal finance well enough to relay them to a generation that is absorbed in their screens.

Not understanding finance and economic principles also put the entire country at risk.  It provides an opening for socialists to land and expand.

Holberg recently updated their operation.  HR managers now get a beautiful dashboard that can give them a snapshot of the financial health of the people in their organization.  At the same time, employees remain anonymous.

It’s really time that we do something about the US financial ineptitude.  We can wait for a public school solution that will almost certainly be less than stellar.  Or, as an employer you can assume that responsibility for yourself and ensure that you have a financially healthy workforce.  Even though you are signing their checks doesn’t mean that they will follow through and make the best decisions with the money they earned.