I think this is really great but IMHO college is too late for this. Personal finance should be taught in middle and high schools just like health classes.
When I was 18 and a freshman in college I saw some crazy decisions including using student loans to put a down payment on a car or taking out private loans for spending money.
I was taught budgeting and basic finances in both middle and high school (I went to public school in NJ) and whatever I learned evaporated immediately because I had next to no use for it at the time. College (when people are getting more independence than they’ve had previously) is a much better time to teach people these skills.
In general, I chafe at the types of educational arguments that go “we should teach kids more useful skills, like how to file a tax return!”. I think such arguments would benefit from the knowledge that some students are already being taught this, and need to relearn it when they get out into the work force anyway.
A lot of the "teach skills early!" advocacy seems to come from people who have little contact with teaching or teachers. Teaching someone a skill they won't practice for 5+ years is a basically hopeless project; there's no incentive to learn it and little chance of retention if it is learned.
I remember learning to balance a checkbook in 7th grade. Why? What on earth did that teach me? Certainly not how to balance a checkbook as an adult; the seven year gap between learning and having a checkbook meant I learned it from scratch as an adult, and frankly it's not a hard skill to gain without formal training.
If we're going to push 'practical skills in the classroom', it ought to be done with an eye towards what's age-appropriate and likely to be retained. The same year I learned to balance a checkbook, I learned to use Microsoft Office competently, work a simplified email account, and handle basic cooking and laundry. All of those things got steady real-world practice and I retained them nicely. Instead of teaching tax returns and budgeting in middle school, I'd love to see high school students get trained in things like public speaking, studying skills, or critical reading of the news.
> I was taught budgeting and basic finances in both middle and high school (I went to public school in NJ) and whatever I learned evaporated immediately because I had next to no use for it at the time.
Absolutely. This is why, as a parent, I'm going to teach my kids about money early, letting them make consequential mistakes as early as possible, probably starting around 2nd or 3rd grade. We'll fund the roof over their heads, the food in the fridge, very basic clothes (shoes, socks and underwear, basic shirts and pants, basic outerwear) but anything else they'll have to spend their own money on. They'll get a fixed allowance plus they'll get extra money for doing things around the house. Initially this will be in "the bank of mom and dad" with a super high interest rate (like 5-10% per month) which will hopefully help make the concept of compounding interest stick earlier. Over time we'll transition to joint bank accounts with separate debit cards.
My parents taught me (most likely inadvertently) all kinds of financial lessons very early in life. I had a weekly allowance that was earned doing generic chores. There was a list of bigger spring-cleaning-style chores that had their own separate payouts. Most importantly, 50% of everything I "earned" was required to be saved in the bank. The rest was mine. Paying taxes and saving appropriately was never something I had a hard time doing as an adult.
Requiring 50% to be saved is a good move, I might steal that. I think I might also do a "match" to a Roth IRA when they're older and actually earning taxable income.
My mom never tied allowance to chores, we were just expected to do chores. The problem with tying them together is that at some point the kid will just opt out and you have no leverage. I had a bank account but we were never diligent about deposits so saving was harder for me as a young adult.
you could add another rule where interest doesn't accrue if they temporarily opt out of your system; in fact, it could be negative interest during that period.
IMO, there's substantial benefit to people being made aware of how much they pay in taxes.
I'd also like tax returns to be due 2-6 weeks before elections, so the figures are fresh in voters' minds. (That's not to say I'm anti-tax necessarily, just that a tighter the linkage between "what I pay" and "what I expect" would be beneficial.)
I don't think that most people even look at their pay stubs - either physically or electronically, so adding yet another sheet with a big pie chart with vague slices like FICA, Defense, etc. wouldn't accomplish much.
Taxes are also hidden in various ways.
The ACA is more or less a redistributive tax charged to your health care premiums.
More than 10 percent of your salary is deducted as employer FICA contributions, but they are essentially paid by the employee in terms of salary potential.
Property taxes and municipality costs are hidden in mortgage payments and rent.
With the exception of more education, I think the only true way to get people to understand where their taxes are going would be to not auto-deduct it from their pay checks or as employer paid or bundle them in with other payments (like mortgages), but instead send them several distinct bills to be paid in-person to some representative of the beneficiary.
For example, I think defense spending would be less popular if each worker had to write a check for a few thousand dollars every six months and go deliver it in person to the local army base.
Same thing for Social Security and Medicare if young people were required to deliver a check to individual retired persons (who, would, statistically be in far better financial shape than the millennial).
Absurd sure, but it jibes well with the related sentiment of paying everything in cash for a short interval of time to physically feel the "pinch" of paying for things that come too casually using a credit card.
It's a pretty crazy notion that our employers are the unpaid tax collectors of the government. This is precisely why the government fought all the movement toward 1099 contract work since then there were effectively more employers to juggle and more likely to not be able to collect as effortlessly as with few large employers.
And the lawmakers in the US know a dirty secret: if taxpayers had to actually write a check for their entire tax bill on April 15 each year there would be blood in the streets.
Instead - the withholding system not only keeps the riots at bay but also makes “tax day” a happy day as money rains from the sky onto almost every US household [1]. Horray, it’s TAX DAY! Honey, we’re going to dinner and takin’ the kids to Walmart to pick out a prize!
That's a common thing I have to repeatedly explain to people, that a large tax return is essentially a free short term loan to the government. I had a friend post a photo of $9k in cash with some comment in the direction of friendly prideful boasting of some sort. I replied to him informing about what happened and that he needs to update his withholding so he doesn't have a large return and emailed him some articles about the drawbacks of large returns. It's a pretty crazy world. I've also had a friend who donated a ton of his money through the year and itemized deductions and had returns in the tens of thousands of dollars. His HR department was using the family size withholding table which maxes out at like 6 dependents or something. I imagine they did so for simplicity and probably didn't have many individuals for which that table was suboptimal. I pointed out that there's a formula withholding section to the W4 that he needs to look into so he doesn't have these ridiculous sums of money come tax season.
why so Employers benefit from state provided infrastructure and from the education of workers.
Or are you suggestion that Amazon pays a tax for every truck mile they use or pay for the cost of their employees education.
and from my experience a self employment true 1099 contractors are ripped off by employers.
the point is about the interest the government takes in the ratio of the number of tax collectors to the number of tax payers and keeping that number low; it's not about the merits or abuses of the 1099 status.
It would benefit the hard right small state parties - that's one of the reasons the UK civil service has what's called purdah they are not allowed to issue information "which could be seen to be advantageous to any candidates or parties in the forthcoming election"
But in the UK we do get a yearly break down of where our taxes go - just not directly before an election
Logically if releasing at time X would benefit party Y, then it would seem that party "not Y" is benefited by releasing the information at time "not X".
No, logically, there are many more times than "X" and "not X", furthermore most countries have more parties than "Y" and "not Y".
And there are different pieces of information that could be released.
But it's also a false balance, just because two sides have different positions doesn't mean they are equal. Process abuse and dirty tricks are not okay.
Absolutely this. We were actually taught basic finances, cooking, cleaning etc when I was in elementary school. They called it "hemkunskap" which literally translated to "home knowledge". I used to think it was useless then, except maybe for the cooking classes – I enjoyed those – but I can trace back A LOT of my deeply rooted knowledge for personal finances and other home skills to those classes. For instance, I moved away from home at age 15 to attend high school in a different town, and all of a sudden I had to deal with a bunch of things I never had to care about before, like weekly budgets and what not. Right then it dawned on me just how useful those classes actually were, and they really did help me out a lot.
I wish this had been a staple class throughout my entire stay in school. A lot of the stuff will be repetitive, but that's what it means running a home and a life – a lot of chores that you keep doing over and over, some maybe you'll optimize like hiring a cleaner (after working out it fits your budget!) or investing in technology that just makes things easier.
As you grow older, the classes would obviously need to become more advanced, but I think this would go a long way to make kids much more capable to deal with real world problems, and there's a lot of cross over with other subjects as well. I don't know if schools still do this, but when I went to elementary school we had wood working and/or sewing class. I enjoyed those, but we had those for way longer than we had home skills class, and it seems to me these three could be successfully combined.
We also had dedicated cooking/cleaning and health classes but basic finance was usually bundled in as a chapter or two in health classes. Having a dedicated class for personal finance would be hugely beneficial. Especially for High School seniors.
I don’t think the college prep courses really tell you what impacts student loans have. It’s more listed as an option you have if you need it but they glaze over the lifelong impacts.
agreed that having it repeated (with more advanced topics) would be more useful. learning about this stuff at age 9... doesn't hurt, but as you starting handling money (odd jobs, after school work, etc) a whole new set of issues comes up that most people aren't prepared for.
we had 'home economics' in middle school, but only for one year, IIRC. We learned a bit of cooking, kitchen safety, and some sewing. But, AFAICR, no personal/home finance stuff (but it's been > 30 years - perhaps it was there and I missed the 8 minute lecture?)
Back then Home economics was designed to teach "girls" to be a wife whilst boys did metal/woodworking.
School suggested that as a dyslexic I should do the typing course I didn't as that was for girls - in hindsight learning to type properly might have been a good idea
Not much traditional engineering jobs going in the UK though I did see a ground Worker team leader post advertised locally for more than th developer role :-(
we had both. girls/boys did both home-ec and metal shop. we had wood shop too, and I do believe I took it, but the year before it was closed down because a teacher lost a finger (on a bandsaw, I think).
I agree that basic financial ideas should be taught in high school, but people aren't always ready for a deep dive until they've started to be more independent.
Seems to me personal finance should be something you start learning from a young age by watching and learning from your parents and other people you interact with. If schools need to teach this because of failing parents, starting in elementary school would not be too early.
> I think this is really great but IMHO college is too late for this. Personal finance should be taught in middle and high schools just like health classes.
That's all well and good, but it won't really help if the students have no real income to practice with. Sure you can warn them of going into debt, but on the other side of the coin "This is what you should do if you theoretically had a salary" is less effective than "So you have a salary. Here's what you can do with it"
This is what allowances are for, teaching them how to make right decisions with their own money early, with all the resulting consequences for bad decisions.
When I was 18 and a freshman in college I saw some crazy decisions including using student loans to put a down payment on a car or taking out private loans for spending money.