Monday, March 10, 2008

Financially Illiterate

Auto loaning just reached a new milestone recently. Some credit outfits now offer nine year loans to purchase new automobiles. While this helps consumers to negotiate much lower payments, it also benefits the credit firms who will bring in much more on interest. Unfortunately the value in a car at a certain point declines so quickly that many will find themselves owing more than the car is worth or paying on a car that died. This comes from a credit industry currently reeling because they greedily encouraged marginal buyers to make poor decisions on home loans.

The answer does not lie in more regulation. People got what they paid for and reaped the rewards of their judgment. To help consumers make good decisions, education is needed.

West Virginia currently requires four years of math to obtain a high school diploma. This contains an element of absurdity currently because most students never need higher math, not to mention the fact that advanced math subjects must have lower standards to ensure a decent rate of passage. What West Virginia and every state needs to do is to offer an alternative real life mathematics course for seniors. Few students ever need trigonometry or calculus in their chosen fields (although you should never stop offering these subjects.) Every student needs to know how to balance a checkbook, create a household budget, figure up a tip, do their income taxes, negotiate loans on a limited budget, and other real world skills.

Is it not amazing that schools have thoroughly embraced the idea that fifth graders need to know every last detail about sex, but they have not given the same attention to finances? Poor decisions about sex can ruin a life, so can uninformed financial decisions. Our economy is experiencing problems because entire generations have gone uninformed about how serious credit decisions can affect their lives. It is time that every high school in our state offer a math course on how to deal with the real world.

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