Only 55% of Americans are invested in the stock market. These Americans understand that while investing is riskier than saving, it can be beneficial for them. However, it seems that many teenagers have little understanding of money, markets, and their personal finances. This fact seems glum as teenagers are bright and thoughtful people. Albuquerque Academy is filled with bright students eager to advance their understanding of the world. This is why it seems so bizarre that few of them understand the role the stock market plays in their personal finances. In a world as volatile as ours, the case to understand your personal finances is even easier to make. But even in “normal” years, investing can help make life easier. Early retirement, disposable income, and extra savings for medical emergencies are all reasons that investing and diversifying are so important. A class that would promote investing and interest in understanding money would help Academy students throughout their entire lives. The absence of such a class seems especially strange in our community.
Bruce Orem, is the CFO of Albuquerque Academy. He started the AA DECA club, a national organization that aims to help high school students become interested in business. During my interview with him, he made it clear that he “would love to see [a financial literacy course] required.” Concepts from how to get a loan to basic investing lessons would be taught in such a class and can start to help kids “as soon as they get to college”. Furthermore, Morgan Stanley’s Bruce Seligman says that it is important for teenagers to understand money. “The younger you start the better. But that is the school’s responsibility,” he says. “Personal finance is very practical,” Orem says. He also points to the fact that there are many possible pitfalls for students, especially when kids get to college. Orem says these traps include “easy to get credit cards, all sorts of new ways to spend money, like parties.” Orem sees this as another reason why a personal finance course would be very helpful to teenagers in their junior or senior year of high school.
Because of this clear consensus that high schoolers should be exposed to the ins and outs of personal finance, one would think that schools would make more of an effort to require this type of course. But, the sad truth is that only 18.4% of high school students are required to take this class to graduate. This stat is worrying and it makes clear why the traps that Orem spoke of can heavily affect college students in a variety of ways. Poor financial habits are something that can be learned early. Additionally, falling into these pitfalls can hold these students back for the rest of their lives.
Aside from avoiding financial mistakes, here are many other reasons that teeenagers should spend time learning about finance and the markets. Orem believes personal finance is “straightforward stuff. We’re not talking about calculus here. It’s very straightforward stuff that everyone can understand with good teaching.” In many cases, a financial literacy course is more beneficial than required high school classes. When we look at it compared to a class like calculus, it is easy to see that it can be more useful in daily life. Not everyone who graduates high school will use a calculus class, but nearly everyone will need to use personal finance. Think about it like this: The Atlantic reports that less than a quarter of Americans have jobs that require more than an understanding of basic fractions, but a calculus class is still a norm for many college-bound high school students across the country. Conversely, 80% of Americans claim they are tied down by debt. Although an understanding of high level math is important, better financial literacy would help many Americans in their life. Financial literacy for teenagers is so important that it can actually save lives. It’s hard to say exactly how much a class like this would help some people in staying out of large amounts of debt. However, one thing is clear, a class of this nature would certainly help people better understand what they need to do with their money. This phenomenon is clear to Orem and Seligman who both share the opinion that personal finance for teenagers is a must have class. While Albuquerque Academy fulfils its duty in preparing students for college, it falls short in preparing people for life.