Basic Banking Math In High School

"Education costs money, but then so does ignorance."

-- Sir Claus Moser

I have long been a proponent of educating high school juniors and seniors about money management, credit cards, FICO scores, mortgages, etc., etc. I call these items Life Math"math that is truly necessary on a daily basis to get by in life. Our future depends on teaching our children how to navigate this complicated system chocked full of pitfalls and land mines. Not only do we (as a Country) need to start providing a road map to help develop their common sense on the subject, we should be required to teach them the math involved "" the system and the math are inseparable. Look, if our youth are smart enough to build websites, hack into the CIA, change our culture with Facebook, Microsoft, Apple (all started when they were our sweet "kids")"then they possess the intelligence to comprehend how their FICO score affects their interest rates, which affect their monthly payments, which affects how much of their income goes out in bills"and so on. How to balance a check book could be taught to 5th or 6th grade children"and should be"the earlier good habits are formed the harder they are to break. Where this Country went wrong financially all starts with balancing a checkbook "" and understanding the difference between red (bad) and black (good).

Part of the education needs to start at home, but a lot of the problem stems from the fact too many generations have slipped through and we have a large group of parents that don"t know where to begin "" they are lost themselves. If you do a Google Search on How do I teach my children how to balance a checkbook you will find a ton of links offering free or paid advice.

If the good habits are formed early and maintained throughout life we will have less instances of consumers becoming road kill while corporations take advantage of the system and maintain course"often times coming out stronger (granted"scores bit the dust this go around). If we had taken just some of the Bailout money and used it for education maybe we"d see a difference.

According to the US Census Bureau as of July 1, 2008 there were 21,514,358 people ages 15-19 in the United States. CNN"s Bailout Tracker Website shows the United States has committed $182,000,000,000 to AIG (just one of many, and not even the most money) to help bail them out of their mistakes"losing other people"s money. If all of that money were committed to the 21MM+ ages 15-19 each of them would receive an educational grant of $8,459.47. According to a Bank Rate article the average one year tuition at a Community College is $2,360 "" which means a grant of $8k+ will pay for their 2 year Community College Education (and board if necessary). If they don"t use the rest on boarding they have enough left over to help pay for books when they move onto a 4 year school to finish their education. I wish I knew a math whiz that could come up with some algorithm that would help quantify the value of paying for post-secondary education for 20MM+ of our youth vs. "bailing out"/lining the pockets of company executives.

Or, if you take the approach college is too expensive and doesn"t necessarily guarantee a financially comfortable future then you can argue the money be better spent on grants for small business. There are stats galore of how important small business is to our country. Educating the future business owners on the basics of running a business can be a condition of the grant "" to receive money classes must be attended. The SBA already has a pretty informative site to educate small business owners, and maybe some of the bailout money would help expand the resources and beef up personal support systems. As a WSJ Article points out, small businesses are finding it more and more difficult to find financing for their dreams"funding from Angel Investors fell 30% in the first half of 2009.

Instead of bailing out private lenders by giving them a student loan guarantee commitment of $195 Billion, give it to the students"then they won"t need as big of a loan, making it easier to pay off after graduation when they get into the workforce. Not everyone can be a Bill Gates, Steve Jobs or Mark Zuckerburg, and quit college because they have billions of dollars already rolling in.

Since not everyone can start that way, we need to give everyone a good foundation of knowledge that will create generations of fiscally responsible people. Maybe then we can stop blaming corporations for taking advantage of us and the system, and we can start taking responsibility for being uneducated, nave targets.

by: Zach Machado

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