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Personal Finance 101

J Money at Budgets Are Sexy wrote yesterday about why schools teach about the stock market. It got me thinking about my personal finance education.

During my senior year of high school, one of the school administrators came into our class and began to talk about finances. I didn’t realize it at the time, but what she was really talking about was personal finance.

She spoke about balancing our checkbook, not going overboard with purchases, and using credit wisely. Most of the advice she gave was vague (what does using credit wisely mean? I didn’t even know what mistakes I COULD make!), and parts of it didn’t apply (What is a checkbook??).

Back then, I was interested in saving my money instead of wasting it, but I didn’t realize exactly what college would be like. I didn’t know that eating out can get expensive, that going out, new clothes, and video games would all be coming out of MY bank account. None of that applied to me in high school, and this lecture didn’t help get me on the right track.

In college, I took three economics classes, two accounting classes, and one finance class. I remember very little from those classes, although I do remember learning about supply and demand. What I didn’t learn was how much money I would need, where that would be coming from, and that credit could be your best friend or your worst nightmare.

I didn’t know anything about student loans. I didn’t know the first thing about retirement, and I had no clue why I would be doing any long-term investing. I was focused on making $2,000 in the summer so I could survive the year without running out. And for me, running out meant running out. I didn’t even know how to get a credit card, and I’m glad, because I definitely didn’t know what 19% APR meant.

If I could speak to the high school class of 2010, I would say:

1. If your parents are going to be paying for any portion of your college tuition, go home and thank them. They spent a lot of time working so you could live a great life, and you should appreciate that, even if you don’t understand that they gave up vacations, a nicer house, and a fancy car.

2. Learn about credit. Here is a nice first resource: Credit Series. Try and build your credit throughout college if you can. If you skip that reading, at least know that you will hurt yourself if you open a credit card at a football game in order to get a free t-shirt.

3. Set up a budget. Figure out what is most important to you and spend your money on things that make you happy. You will quickly realize that you don’t have enough money for anything, but you can stretch your dollar enough to have money for what you really want.

For those in the 2010 college class, I would give them this advice:

1. If you choose to start work now, work to get out of debt quickly. Compound interest will hurt in a few years. But if you get out now, it will be your best friend and retiring at 45 could be a real possibility. If you hate doing homework now, think about how nice it would be to be able to stop working 20 years before everyone else.

2. Build a Budget – Find out how much money you will need to pay for necessities. Sign up for, keep track of your finances, and make a budget in a few months. Save 20% for long-term goals and spend 10% on whatever you want (travel, video games, going out).

3. Open a Roth IRA. Don’t worry about trying to time the market or earn 20% a year. Doing that is like playing poker online. You COULD do great, but you could also lose your money quickly. You don’t want to risk your money like that.

I think it’s a big problem that students are forced to learn hard lessons on their own. While it’s nice to learn technical skills, it wouldn’t be hard to create a class where students learn the upsides and downsides of money and the basics of budgeting, credit, retirement, interest rates, and mortgages.

I found my accounting class extremely boring. I KNOW students would rather learn about topics that apply to their lives. Believe it or not, college students like gaining knowledge, and if they are provided with classes that interest them, they will be much better off in the future.



  1. Almost every time I pay the bills I wish I could be transported back to my naive careless college self and yell, “DON’T BUY IT!”. AND my parents gave me all the right advice along the way of course I didn’t listen. I think unfortunately some people (like myself) will only learn the hard way. I intend to try to teach my kids the importance of personal finance. If three out of my three kids “gets it” and avoids being in debt I’ll consider myself BEST PARENT EVER:)

  2. @sahmCFO – I’m with you! My kids learned to always save 20% before they learned table manners (we are still working on the table manners :-))

    Daniel – I think you are the first blogger to share they actually had any PF training in high school beyond how to write a check! This is a sorely missed subject in our educational system for sure. Last I checked only 21 states require any form of PF education and much of it is lacking.

    • PLEASE don’t confuse that vague 20 minute lecture with real training! I wish I had something formal that prepared me for what was ahead.

  3. I’m taking a “Teaching mathematics to elementary students” class and I think that teaching kids to understand math in real life situations is also beneficial. The class I’m taking focuses on teaching through problem solving to build higher-level, critical thinking skills, a method that is just beginning to take off in schools. Previously, and still currently, most math classes are teacher directed or lecture classes and the students really don’t leave the class understanding math or having obtained basic math skills, a very important skill for future personal finance.

    And I have to agree with LeanLifeCoach, I don’t know of many schools offering personal finance classes in high school. Hopefully this will change in the future.

  4. Great advice, Daniel. I completely agree that students need to be drilled about how hurtful debt is. A lot of my friends casually carry large amounts of cc debt and they have no idea how much it’s hurting them.

    I’d love to see a mandatory high school and college course implemented soon.

    Austin @ Foreigner’s Finances

  5. The idea of a course, or maybe just a mini-course for high school students is a great idea! Why don’t you start developing a curriculum – bet a lot of schools would buy in.


  6. You couldn’t have written this post a couple years ago??!!! where were you when I was in highschool!! … I’m counting on you to help me through my student loan debt that is probably piling up as I write this post.

    Also remind me to go home and YELL at my parents for making me pay for college! :-)

  7. During my senior year, someone actually came in to speak to us for about an hour and a half about these issues. They supplied us with a booklet which had educational information about such things as budgeting, credit, and just financial goals in general. I haven’t gone through the whole booklet yet, but I know I will before it’s too late, and I agree that it really is important for high schoolers to get that kind of education. Maybe it’s going to become more of a trend now?

    • That’s great that you had someone come in and discuss it with you. Did everyone understand why it was important? It seems like people always realize how important it is in retrospect but don’t appreciate it when it happens.

      Hopefully it becomes more common in high school. But in the end, a booklet is still a booklet and that means that it’s up to the student to open it and read it. You find it interesting, which is great, but do your peers? If they had given everyone a biology booklet, how many people do you think would open it?

      Do your friends in other grades or other schools have the same training? It sounds like most people do not, but I wonder if maybe it’s becoming more common.

      • I think you’re definitely right that most people don’t realize the importance until after the fact, and even I haven’t gone through it all as much as I tell myself I need to. And it absolutely has to come from the student’s own interest and will, which can’t necessarily be controlled. But there needs to be more of a serious attempt at education which I’m sure would make a dent in the amount of students who come in unprepared.

  8. I WISH high schools would teach more about personal finance than stock games and the like. That’s wonderful you had this opp and that you remember it! It is funny we no longer use checkbooks anymore :)

  9. AWESOME POST!!!! Most of us learn by doing. Unless we have responsibility for paying the bills and our own lives….most of the finance ed will go down the drain. When I was younger, before I had any money, I really didn’t care about financial matters. Once I started working, saving etc. managing the cash became REALLY important. Now, as the mom of a teen. I think the hours of financial education I have bestowed upon her have not made a dent!

  10. I strongly agree that personal finance should be a major subject in high school. Its amazing how kids in college today are even unaware of simple issues such as credit card interests.

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