It’s no secret that most people don’t know how to handle money.

Personal finance is one of the primary categories of blogs on the internet today. That’s because it’s needed.  It’s highly needed.  And most people don’t even know where to start.

People don’t understand things like the stock market, mutual funds, index funds or compound interest in general.  The average person doesn’t keep a budget, and they overspend on a daily basis.

I know you don’t do that, but you may still be wondering why personal finance isn’t taught in schools, and why most people don’t have a clue when it comes to money.

Here’s some insight…

A Wrong View of Wealth

Let’s start with the paradigm that people see money through.

It’s often assumed that people with big houses and nice cars are wealthy, but that’s usually not the case.  If you’ve read books like The Millionaire Next Door, you know that the average millionaire doesn’t live a fancy life.  Though some do live in luxury, most understand that having expensive houses, cars and toys means paying a lot for upkeep…and most importantly, they understand that they shouldn’t spend a lot of money on things that lose value.

People assume that doctors, lawyers and other high-paid career fields lead to wealth and a knowledge of finances.  Also not the case.

We’ve all heard about how many professional athletes are filing for bankruptcy within a few years of retiring, but that’s to be expected, right?  They are in a profession that is known for living a luxurious lifestyle and spending a lot of money.  Doctors, however, are in a professional role, and they went through a lot of school, so they should know how to handle money…right?

Not really.  Sanj Katyal, MD, explains that, while doctors make a lot of money, many of them struggle financially.  Why?  It comes down to two words: financial literacy.  I’ve said it before, but it’s worth repeating: if you make a million dollars a year, and spend a million dollars a year, you’re still broke.

No matter the profession, people just aren’t being taught financial literacy.  And why is that?  Great question!  But unfortunately, nobody knows the true answer…

Why Isn’t Financial Literacy Taught in Schools?

It’s easy to say “financial literacy should be taught in schools”, and I think that it should be, but there may be a bigger reason why it isn’t.

Is it because the government needs a certain amount of people to be in each class (a certain amount of bosses and a certain amount of worker bees)?  Maybe, but that topic is far too long for a mini-blog.  Is it because the government doesn’t know how to handle money?  That’s part of it.  It’s obvious that the U.S. government has no business teaching anyone how to handle money.  It could be because money is a taboo subject.  It could be because people are expected to teach it in the home…there are a thousand “could-bes”.

We could dive deep into conspiracy theoryville, but for the sake of practicality, let’s keep this simple.

In a Time article, Dan Kadlec points out a few good reasons why financial literacy isn’t taught in schools:

• Only one in five teachers feels qualified to lead a personal finance class, according to a University of Wisconsin study. So we don’t have enough instructors.
• Personal finance concepts are not part of standardized tests like the SAT or ACT. As the saying goes in education circles: If it’s not tested, it’s not taught.
• Education is run at the state level. So there is no federal authority to mandate personal finance classes, and each state has its own ideas on how to go about it.
• There is little academic agreement as to what kind of personal finance instruction works. Many educators are waiting for clarity before they sign on.

There’s at least part of the cold hard truth.

I honestly feel like we have made progress.  With the amount of books, blogs and teaching on financial literacy today, it’s relatively easy to educate yourself.

It’s obvious that we can’t rely on someone else to provide this education, so we must educate ourselves and our family on financial literacy.

Why We Must Take Action

The schools aren’t teaching financial literacy.  If they ever decide to start teaching it, think about how long it will be before the curriculum is really effective.  I can see the first class now: “How to Increase Your Credit Card Limit”.  God help us.

It starts with you.  With me.  It starts with you and I taking action and educating.  Educating ourselves first, and our family next.  Then, who knows, you may decide to start a finance blog.

If you feel like you still have some things to learn, start reading some great finance books.  Learn the basics of budgeting, saving and investing.  Figure out the good and the bad side of credit cards.

If you’re already a step ahead on financial literacy, keep going and start thinking about teaching others.  It’s up to us to reach as many people as we can.  And it starts with you making the decision to learn.  And you’re in the right place!