In Pursuit of Financial Education for All

Our current economic condition has proven beyond a reasonable doubt that we, as a nation and as individuals, need financial education. It's an unfortunate truth that many students leave high school or college knowing the molecular weight of a carbon atom, but have no understanding of the difference between an asset and a liability. Which of these proves more useful in their day-to-day lives?

It's a no-brainer.

An important message
As a member of the President's Advisory Council on Financial Literacy, it is my goal and the goal of the Council to see that every student receives some form of financial education. We came closer to that goal in March with the introduction of H.R. 1325 by Congresswoman Sheila Jackson-Lee. This widely-supported bill would require every college and university receiving federal funds to provide a four-hour course on financial literacy. This course would be a requirement for every college student receiving a guaranteed student loan.

It's a big step in the right direction, but we need to work harder to ensure every student gets the financial education they need. Today's financial crisis might have been avoided if everyone had received basic financial education about good debt versus bad debt. However, changing our educational system takes time — time that we do not have. We all need to stand up and commit to educating our children, grandchildren and youth groups.

How can we teach a subject when so many of us are also in financial trouble? Great resources like Get Rich Slowly provide a wonderful place to begin the journey and learn more both for ourselves and our children. Take the time to review your finances with your CPA, investment advisor, or a financially savvy friend. Learn together as we all start to rebuild during this economic crisis.

Lessons learned
In 1992, my son Phillip ran into financial trouble in college. Unbeknownst to me he had racked up $2500 of debt on a credit card that I didn't know he had. I was mortified. I thought I had educated him about money and staying out of debt. In fact, I had taught him the same lessons my father had taught me — except there were no credit cards when I went to college.

Even though I had told my son plenty of times how to be financially fit, I never showed him by teaching him about the perils of credit cards. He was with me when I used my credit cards during the “just charge it” times. But he was not with me when I paid off the bills each month, and he didn't realize that I made sure to pay them off each month to avoid interest charges.

It was this sobering experience that started me down the path to educate as many children and adults as I could on how to be financially smart. That same year I started working with our school system to try to include financial education in their programming. But it was far from easy. There were a number of road blocks in the way, and I started to look for other ways to provide financial education outside the traditional school curriculum. Fortunately, by 1994 my son Phil was firmly back on-track and out of debt.

Rich Dad Poor Dad
In 1997, I co-authored the book Rich Dad Poor Dad with Robert Kiyosaki. Together, we formed the Rich Dad Company and co-authored 14 other Rich Dad books that have been translated and sold around the globe. Rich Dad Poor Dad‘s success as a New York Times Bestseller for over six-and-a-half-years proves the tremendous need and importance of providing financial education.

In 2007, I decided to refocus my efforts back to where it all started — the passion I had when Phil got into credit card debt — financial education for our youth. I left the managerial board of the Rich Dad Company to pursue that goal.

Today, I have developed a combination of educational and experiential learning tools that help parents and interested adults teach their kids financial education — not by just telling them what to do, but by showing them in ways they can understand. In fact, they have the opportunity to earn while they learn, by becoming YOUTHpreneurs and owning their own companies. It is through setting goals and achieving those goals that we can turn the “entitlement” attitude back into the “empowerment” attitude! As these young people learn how to create their own wealth, you not only see their self esteem sky rocket but you also see their willingness to give back to those less fortunate.

A brighter financial future
We need to give our kids a chance to succeed or fail while they are still at home. Let them have some responsibility with a job. Encourage them to save some of their earnings, give some to charity, and then spend a little. They will learn much more through trial and error than through lectures and assignments. They will most definitely surprise you.

As you teach your children, you may find that you are learning something about money as well. The true bonus will be the memories created from the time you spend with your child and the knowledge that you are giving your child the gift of a lifetime — financial education!

With your help, we can all truly create a brighter financial future.

More about...Education

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others
guest
50 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
HollyP
HollyP
11 years ago

Although it is great that this organization wants every kid to have 4 hours of financial literacy ed in high school, the lessons need to start much earlier. From the time my kids were babies, every time they saw me charge something, I told them I was only charging because I already had the money in my bank account. We have always talked about major family purchases in terms they could understand: Would you rather go to Disneyworld once, or have family dinner at Friendly’s once a week for two and a half years? We also talk about commercials, what… Read more »

Sammy
Sammy
11 years ago

Congratulations Sharon and keep up the great work you are doing!

Nate @ Debt-free Scholar
Nate @ Debt-free Scholar
11 years ago

I believe that most financial training starts in the home. Even if a child is trained to curb his spending habits, he is much more likely to give way to bad habits if his family is stuck in the same problem. For this reason, I think that we should hold “family financial training” classes in which the entire family is taught good financial practices.

Thanks,
Nate

Eden
Eden
11 years ago

Sound financial education should definitely be in schools…assuming we can get *real* financial education and not something sponsored by Visa…but more importantly, the example needs to be set at home.

Not that I blame anyone other than myself for my financial mess, but I never heard any sort of smart financial advice when I was growing up. I spent every dollar I received and no one ever told me I should stop to save any of it.

AppleMan
AppleMan
11 years ago

What ever happened to personal responsibility and parents teaching these things? I’m concerned financial planners will see this federal money as a pot of gold and create a new welfare for their industry. If as a society we insisted on having people (and companies, for that matter) pay for their mistakes rather than get a bailout we’d all be better off.

Patricia
Patricia
11 years ago

I think this is a great article and I’m happy to see that someone is working hard on getting our children educated. Although I believe the education has to start much younger than high school/college, I think some education at any age is better than nothing. Unfortunately I think most people won’t learn the true lessons of finance until they are forced to really think about their spending due to a job loss, sickness, recession etc. Most people (especially teenagers) have the “it won’t happen to me” attitude. Spending habits need to be learned at an early age and kids… Read more »

Juan234
Juan234
11 years ago

I’m surprised to see Get Rich Slowly inviting the author of “Rich Dad Poor Dad” to post an article. This is the most dangerous financial advise book out there. It shuns diversifying, frowns on higher education, advocates multilevel marketing, and promotes those widely expensive “get rich quick” seminars. John Reed has detailed analysis of the book that is worth a look to anyone considering following the advise of Rich Dad Poor Dad: http://www.johntreed.com/Kiyosaki.html#ruinslives Some of his most damning points on the book: Law-breaking advice * Advocates committing a felony: have rich friends for trading stock based on non-public inside information,… Read more »

ResortAtSquawCreekTAHOE
ResortAtSquawCreekTAHOE
11 years ago

Education is KEY to freedom, and key to financial success. With good education, you better know how to manage your life. Also, you need these diplomas in general to help you get past blockades.

It all starts in High School. Those who studied hard, got good grades, and went to good universities generally do better in life, at least financially. It’s obvious. Education is key.

Chett
Chett
11 years ago

I agree with above comments that financial education needs to begin much earlier. While I do believe that educating the public about the knowledge of personal finance is important, I think teaching them the *behaviors* needed to be secure financially is more important. And, if you are going to teach behaviors, yes it needs to begin much earlier. I work with young children every day as a teacher. If I ask any of them if they could build savings by spending more than they earn, they would reply “no.” It’s simple math. Obviously adults are aware of this too. To… Read more »

Alison Wiley
Alison Wiley
11 years ago

I read both the Rich Dad books years ago. Because I grew up with no real financial training beyond general prudence, the material was truly helpful. Yet I don’t see the message as one that builds character or community, and those are just as crucial to a good life as financial education. The 6th commenter made points we should note. I’m surprised that the Rich Dad series ignores the many parts of personal finance where our self-interest overlaps with the public interest, i.e. we can do well by doing good. For instance, when we learn basic techniques for saving gas,… Read more »

Generation Y Investor
Generation Y Investor
11 years ago

I’m happy to see someone fighting to get financial education in schools. It’s really crazy to me that I spent hours and hours learning things I never use in real life. Luckily I had parents who taught me the value of money and how to never go into debt.

Some people aren’t as lucky and personal finance in school could provide the guidance that their parents never gave them.

-Gen Y Investor

David
David
11 years ago

While I applaud the idea of a required course in financial literacy in principle, in practice the federal law being proposed would cause an uproar on college campuses (campii?) across the nation. Right now, there are no federally-mandated courses at the college/university level in the US. Many States have mandated college courses (in State history or government, for example). And universities often struggle with incorporating those mandates into an ever-shrinking degree. (In the State of Texas, we recently capped all four-year programs to 120 semester hours — many disciplines had to drop numerous courses within their major requirements to get… Read more »

ResortAtSquawCreekTAHOE
ResortAtSquawCreekTAHOE
11 years ago

Find out what the losers and slackers in HS and College are doing now. You’ll understand education is key

Anon
Anon
11 years ago

Well, it turns out that the author of this post, Sharon Lechter, actually sued her co-author Robert Kiyosaki (the book ‘Rich Dad, Poor Dad).

Settled out of court.

See:

http://www.azcentral.com/business/articles/2008/09/04/20080904biz-richdad0904.html

Will Crowthers
Will Crowthers
11 years ago

First, long-time reader first-time commenter. Second, I see eye-to-eye with Juan234. “Rich Dad Poor Dad” may be a ‘best-selling’ book, but that does not mean that the information in the book is worthwhile. In fact, the ‘advice’ given in the book is actually a story about growing up in Hawaii around 2 different fathers. While there are ‘some’ good lessons learned the overall lesson of not worrying about college, climbing the corporate ladder and simply owning your own business (and therefore destiny) is something from a Utopian world for most people. I’ll let this article do the rest for explaining:… Read more »

Len Penzo
Len Penzo
11 years ago

Education begins at home and, preferably, before kids reach their teen years.

The best way to do this is to teach your kids money management skills via a ledger to track their allowance and other income.

My kids, ages 9 and 11, are becoming very adept at bookkeeping and are also now much more aware of their finances because of it! 🙂

Best of all, it’s an easy task for kids as young as six years old!

For more, see my post:
http://lenpenzo.com/blog/id506-use-a-ledger-to-teach-kids-money-management-skills.html

IndependentOperator
IndependentOperator
11 years ago

@Juan234:

I agree. Rich Dad has the tone that is common in the personal finance blogging scene (GRS excluded for the most part), which is “the way to lots of money without having to work is entrepreneurship” and “don’t think; just dive in”. Both are ridiculous and dangerous. I too have wondered how many lives have been ruined because people read these words (in Rich Dad and in PF blogs), took the advice, invested their savings and credit in a business, and — as most businesses do — failed.

Tyler Karaszewski
Tyler Karaszewski
11 years ago

As one of the richest countries in the world — one in which average people have bank accounts and credit cards and retirement accounts and own stocks — I find it hard to believe that our education on financial matters is really lacking that much. Sure, lots of people abuse their credit, but that’s not because they don’t know how it works. Go ask any smoker if they know that smoking is bad for them, and they’ll tell you that, yes, they know, but they do it anyway. I’d figure the same is true of credit card debt. People lack… Read more »

J.D.
J.D.
11 years ago

A couple of things: 1. Kris is going to kill me that I left the “molecular composition of a carbon atom” thing in there. I’ll change it. She’s a chemist, and she’s been bugging me to correct this for months, ever since Sharon submitted this post. 2. I’m not a huge fan of Robert Kiyosaki either, but this post isn’t about Rich Dad, Poor Dad. You can see some of my thoughts on Kiyosaki here: https://www.getrichslowly.org/robert-kiyosaki-increase-your-financial-iq/ I don’t feel like Sharon is attempting to sell books. If she were, I wouldn’t have approved this post. She mentions the Rich Dad… Read more »

nmh
nmh
11 years ago

As long as the government is giving out loans the stuff about financial literacy from the government is bogus. I bought into the “good debt, bad debt” thing. I never got a credit card, I lived on campus, ate on the meal plan, and very rarely went out – always using cash when I did. My only debt was (and is) my school loans. What I didn’t expect was to become ill after finishing school. Since I am not totally disabled I have to pay loans (which is fair) but I can’t work in my given profession or for as… Read more »

Masked Financier
Masked Financier
11 years ago

There are essentially two major parts to financial literacy: 1) Learning to manage your finances so that you avoid excessive debt (remember not all debt is bad particularly if it at low locked in rates and is for an appropriate acquisition e.g. your house) and save money over the long term. 2) Learning how to invest. Unfortunately, Sharon Lechter’s post, and many of the comments focus on teaching kids how to achieve part (1) above, with no attention paid to part (2). And let’s face it, federally mandated education programs and mandatory classes will only go so far — they… Read more »

Wilhelm Scream
Wilhelm Scream
11 years ago

I got about an hour and a half’s financial education at school when I was about 15, and it was useless. We learnt how to write a cheque. Initial any changes you make and make sure no one can add any extra zeros. We were given a fantasy budget for a university student, but obviously no one would actually spend as little as they said on going out and as much as they said on eating properly. The fantasy budget was just that – a fantasy! Financial education has to be interesting and pointful, because what I got was awful… Read more »

Michael
Michael
11 years ago

I think Financial Literacy at a young age is key. I give Ms. Sharon Lechter a lot of credit for volunteering as part of the President’s Advisory Council on Financial Literacy. What I find interesting is that the President failed to include Mr. Dave Ramsey of The Lampo Group, Inc., Mr. Howard Dayton of Crown Financial Ministries and Mr. Phil Lenahan of the Veritas Financial Ministries. I think these gentlemen would have helped out tremendously as well. A four-hour course in financial literacy at the college level though will be woefully ineffective. I think non-profit organizations such as Crown and… Read more »

David Parker
David Parker
11 years ago

I am sure Sharon has some amazing information on her website, and being 20 with an ‘entrepreneur’ mind, I was pretty excited. However, that website just has too much going on and would be a lot more useful if it was presented better ~_~. Rich dad, Poor dad was actually the start of my own ‘financial education’ and I think it is a good book. Saying that, I do not agree with everything in the book, but I also do not agree with everyone on GRS. As far as having seeing schools start teaching more on financial education, I doubt… Read more »

IndependentOperator
IndependentOperator
11 years ago

@Tyler Karaszewski: While I agree with you that government needs to stay out of higher education (the last source of education that is somewhat shielded from politicization), I don’t agree that there is no need for financial education. I think it is a huge failure that colleges aren’t already offering courses like this in their core classes. The thing you miss is that the human mind is tailored to think linearly and has a LOT of trouble doing non-linear calculations like exponentiation (which is what compounding is). It is not as simply as “doing something one knows is bad”. There… Read more »

J.D.
J.D.
11 years ago

Because I got a message about this behind the scenes, let me re-iterate that it’s okay to post links to relevant articles on your site. The key here is the word “relevant”. Will (#15) has a relevant article on Len (#16) is close. Alison’s link in #10 is a big stretch, though I’m leaving it here as an example of the sort of thing I generally remove. Why do I remove unrelated links? Because if I don’t, this comments section turns into a festering pit of self-promotion. I really don’t mind if you share relevant material, but I don’t like… Read more »

rocketc
rocketc
11 years ago

I totally agree that we need to do a better job of financially educating everyone in this country, however a government mandated program – especially at the federal level – is a terrible proposal. The President’s Counsel on Financial Literacy will have the same effect as Sex Ed, DARE, the President’s council on physical fitness, etc. More federal spending, more bureaucracy, and less freedom. Our federal government needs the financial education. It encourages poor mortgage loans, it encourages large amounts of student debt, its programs always lose money. The federal government always spends more than it takes in and it… Read more »

Snowballer
Snowballer
11 years ago

I can’t take any advice from a CPA who signs off on a book containing unlawful advice who then doesn’t at least condemn the book even when the advice on its own merits is good.

It’s like Charles Manson telling you that you should brush your teeth twice a day. That may be good advice, but taking it from that source is difficult.

RJ
RJ
11 years ago

Using schools to educate people about financial literacy is a noble goal, but I’m not sure how effective yet another required course can be in making a real difference. For many youth–not just those who rely on parents for financial support, but also for those who earn some kind of income–money matters are really very abstract and take time and experience to learn and absorb. Maybe a four-hour course can teach some practical techniques and a few platitudes about debt and credit, but it will likely not change most students’ attitudes about more deeply rooted issues, such as balancing self-esteem… Read more »

liz
liz
11 years ago

I’m a little disappointed in the quality of this post- it sounds a bit too sale-y to me – either for RDPD or for the other work that the OP is doing… I like reading this blog because in a lot of the articles, salient points in books are summarized and evaluated, rather than it being a sale point for one to buy other things. I dunno – not my favourite post. I think the key for financial education, however, is responsibility. Either a kid at 18 is responsible for his/her finances or he or she isn’t, but there are… Read more »

Greg C
Greg C
11 years ago

I had a lot of financial education as a child and still ended up with significant debt. It took actually going through real life “learning experiences”, and I STILL have a high tolerance for debt. I doubt I am unique. Heck when I see stories about debts of $2500 I have a tendency to think “That’s nothing. You can pay that off in a month with hard work and frugal spending.” While many are ignorant, a lot of highly educated people still have problems and issues due to personality traits,preferences, stubbornness, whatever. I am skeptical that mandated financial education is… Read more »

Diane
Diane
11 years ago

I truly believe that most of the mess our country is in is due to our lack of financial literacy. Ideally, financial responsibility should be taught at home beginning at an early age. That age should be when the child receives an allowance. Given that many adults do not understand nor know much about financial literacy, it is up to the schools to educate this next generation before they become adults. I want to emphasize that not all adults lack financial literacy, but enough do. In my experience as a business owner who teaches money management and financial literacy to… Read more »

Paul
Paul
11 years ago

I think it’s critical that kids get sound personal financial education, however the authors of Rich Dad/Poor Dad are not where I’d go as a resource.

http://www.johntreed.com/Kiyosaki.html

Gena
Gena
11 years ago

I do think we spend so much time defending our points of view (We must do this! or We can’t do that!) that it makes us myopic. Look as a community, I think 99.9% of us believe financial education is necessary. We have more choices than our parents did. We don’t have to be locked into one delivery system. We can mix and match. There could be online education learning modules that could deliver self-learning options. Education does not have to be bound by a physical classroom. Another option is that it does not necessarily have to be tied to… Read more »

jtimberman
jtimberman
11 years ago

@Michael #23, I agree on both counts. College is too late. The credit card companies are marketing to young children. The financial teachers you mention have outstanding resources, especially Dave Ramsey who has a high school cirriculum “Foundations in Personal Finance” and also resources for parents to teach small children “Financial Peace Junior”.

We wouldn’t have had a subprime mortgage crisis (or even a MARKET for it) if people understood half of what Ramsey alone teaches, let alone all three men you mentioned.

DDFD at DivorcedDadFrugalDad
DDFD at DivorcedDadFrugalDad
11 years ago

That’s a great book– but some of its advice must be taken in moderation . . .

Mike
Mike
11 years ago

I strongly agree with this article. I was always taught from a young age about saving money. My parents were never in debt (except for a house and cars). I had a bank account when I was under 10 thanks to my Dad. I didn’t know much about credit cards until I hit high school, but I did know that I didn’t want to pile up debt at 18 years old. I made it through 5 years of college with $0 debt, not even student loans. I have many 20-something friends who are really struggling to make ends meet because… Read more »

Deborah
Deborah
11 years ago

I grew up in the 60’s with 2 sisters and a brother. My father worked 4 jobs and my stay at home mom was a seamstress. No credit cards–if they needed something they would save up for it. My youngest sister and myself absorbed these lessons and we are currently only holding mortgages as debt. We save for the things we need or want and use credit cards wisely. My oldest sister and brother both had major financial problems–one had to go into bankruptcy and the other has no savings. My point is that you can live in a fiscally… Read more »

IndependentOperator
IndependentOperator
11 years ago

@Gena: “I understand that many of you feel your tax dollars should not cover every possible social contingency that a citizen might face.” This isn’t the issue. The issue is that our economy is built on spending, the government’s economists are Keynesian, and the government’s interests are misaligned with those of prudent personal finance. Even *right now* you have people in the government “cautioning” of a reflex to “over-save”. We had “be patriotic; go spend!” messages being sent by Bush and others after 9/11. Whether you agree with these items is not the point. The point is that if you… Read more »

rocketc
rocketc
11 years ago

Ind. Contractor – you hit the nail on the head. We all agree on the problem, but viewing our government as the solution to that problem is a problem.

Matt
Matt
11 years ago

Financial education is paramount for all ages. Kids are too easily slipping into bad habits because they were never taught anything better! I think Sharon makes some great points.

The best mix result is going to be a combination of education from parents at home AND in schools. Another bill has been introduced in the House and Senate, the Financial and Economic Literacy Improvement Act of 2009, that I think has some real potential. It would bring financial education to both secondary schools and K-12 students.

Gena
Gena
11 years ago

@Independent Operator, look I did say that there were other ways to deliver the information. The U.S. Government does publish consumer financial information via the Consumer Information Center at Pueblo. There is free content available. Now let’s jump the grid a little bit. What if our government put out the call for Free/Open Source programmers, gamers or what have you to create a financial education application? It would be a donated gift to the American people. Financial professionals who choose to could prepare content that would be reviewed by the opposing side and neutral parties to get to the nub… Read more »

Diana
Diana
11 years ago

I think that financial literacy should be taught in schools. From Kindergarten through college. Some posters have commented that this should be something taught at home. I think from our current economic climate it is obvious that the parents wouldn’t know where to begin. Much like sex ed, financial literacy is a taboo topic that many parents are unwilling or unable to discuss with their children. I’m still not sure that it would do any good. Our cultural climate promotes a completely different image than the one that would be taught at school, and culture always wins. Until fiscal responsibility… Read more »

Matt
Matt
11 years ago

Looks like Sharon also has been running a blog and posting a financial tip a day on her Web site, http://www.sharonlechter.com.

Also, I believe Sharon left the Rich Dad group because of the new directions it has been taking. The work she is doing now is mostly youth based, and definitely needed!

Sharon Lechter
Sharon Lechter
11 years ago

Since writing this blog I am happy to announce that there are now additional bills on the floor of the Senate (S. 638)and House (H.R. 1645) that will require financial education of K-12 students as well as post-secondary students. I encourage you to review this legislation. I have a summary of these bills on my website http://www.slechter.com/critical-financial-education-bill-introduced-in-senate. These bills address appropriate non-profit involvement to work with the states to provide quality financial education. I also agree with many of your posts that experiential learning is the best way to learn, that financial education must start at much earlier ages, and… Read more »

Sarah
Sarah
11 years ago

Just food for thought – how about if you send a child to a public school the parent/s be required to take a 4 hour course on financial education?

Travis
Travis
11 years ago

Regardless of the whole Rich Dad Poor Dad association I happen to like Sharon. I have met her personally and she has pure intentions. Her advice saved me lots of money when I was setting up my company.

Masked Financier
Masked Financier
11 years ago

One particular interest of mine is the financial services advertisements often promoted by Google through Adsense and Adwords. A number of these advertisements are promoted on the blog posts of Get Rich Slowly. Indeed on the “Pursuit of Financial Education” there are / were Google Ads for the following services: – Tips £174,934.50 Profit; Copy a Genuine Professional Punter £495pm – One Week FREE Trial HorseRacingPro.co.uk (not sure of the origin of this but it seems somewhat over-promising) – Stock Market Secrets; Interested in trading shares? Free Stock Market Course (a course promoted by the infamous Darren Winters of WinInvesting… Read more »

Brett
Brett
11 years ago

I do not trust anyone affiliated with Rich Dad, Poor Dad. It is one of the most poorly written books I’ve read. It was full of silly advice. I laughed out loud while reading some of it; wondering how this could ever be a best seller. That was when I realized I had spent my money on it due to popular sentiment. I vowed never to follow the crowds like that again.

sandy
sandy
11 years ago

My daughters and I did something that was really cool (in a financial sort of way!)yesterday. Our public library offered a financial literacy program for teens offered by our county extension office. There were about 10 adult volunteers from the community (Kiwanas, I think). Each sat in front of a sign that read “Housing”, Utilities”, Transportation” Food, Child care, etc… Each kid pulled cards from 2 bags: 1 was for what career he or she would have and how much that career paid, and what amount of education was needed for this job, and the other was whether they were… Read more »

shares