The need for early financial literacy

In these tumultuous economic times of soaring credit card debt and home foreclosures, it's become apparent that financial literacy is a sorely needed skill.

Just ask U.S. Sen. Patty Murray of Washington state, or Wall Street Journal reporter Jonathan Clements. Both want to get kids to learn about how money works. I couldn't agree more. My middle-schooler is currently learning the mathematical formulas used in determining the areas of geometric figures. He questions the relevance of learning these theories, and his grades are proof that he's not convinced that this particular knowledge will get him far in life. As a parent, I have a hard time communicating to him the importance of this information because, as a journalist, I have never had to apply these formulas in any way, shape or form (pun intended) to any aspect of my life. I'm sure there are engineers out there who would have no problem explaining the importance of geometry to daily life; I just can't.

What I do wish was included in every math class curriculum across the country is basic financial literacy. After all, how many times a month do you sit and wonder, "Which mathematical formula do I use to determine the area of a rhombus?" versus "Why is my credit card balance still so high even though I pay the minimum payment month after month after month?"

So I am behind Sen. Murray's legislative effort to revamp financial literacy programs in undergraduate and secondary schools. Called the Financial Literacy Improvement Act of 2008, Murray calls for a $250 million investment in financial literacy program for students as well as adults and seniors.

"When I talk to those struggling to pay back the subprime loans that have ravaged our housing market, I often hear them say 'they didn't teach this stuff in school.' I think it's time that we made a real commitment to teaching financial literacy in schools and colleges," Murray says in a press release.

Wall Street Journal writer Jonathan Clements also takes up the cause of teaching kids money basics in a recent article "Making Kids Money Savvy: Try These Four Financial Tricks." He offers advice to parents on how to promote delayed gratification by putting off instant purchases and spicing up the allowance routine with get-it-now or get-more-later experiments. Clements quoted a study that appeared the Journal of Consumer Research that found that people were less likely to spend a $50 bill versus five $10 bills, relating that if you give your kids a $5 bill instead of five $1 bills, then they would be more likely to spend that $5 bill slower.

If students were more educated about money and how it works in addition to how to make money work for them rather than against them, perhaps the soaring debt rate and subprime housing debacle wouldn't be as bad as it is now. I say financial literacy trumps trapezoids any day.