Our grandparents learned more in school about personal finance than our children do now. What they needed to know about the nation’s financial system was included in math class.
I’ve got three editions of “Hamilton’s Essentials of Arithmetic,” a nifty little series from 1919 that focused its lessons on “the broader fields which the child is likely to enter after leaving school–fields in which problems of taxation, insurance, investments and other business and social enterprises make a practical demand on arithmetical knowledge.”
These texts go far beyond math drills (although there are many, many pages of those, too). Fifth-graders learned that the money they would be depositing in their school savings banks “should be earned by the labor of the pupil or saved by self-denial,” and then calculated how much profit a student deposited by making jelly from “windfall apples."
Seventh-graders learned that “people insure their lives so that their families may be provided for in case the breadwinner should die,” and then compared the cost and benefits of premiums for ordinary, term and endowment life policies.
Because society expected children to go on to jobs on farms and in businesses, schools made sure they were ready by the time they left eighth grade. An entertaining reading primer from 1915, “Stories of Thrift for Young Americans,” declares “…not until each grammar-school graduate knows how to practice true thrift will the highest prosperity of the country be assured.”
A hundred years ago, we already knew what our children needed to be competitive in the world. So how did we get from then to now, where our 15-year-olds scored ninth out of 18 countries in financial literacy in 2012?
In some ways, high school’s end game changed after 1945, an unintended consequence of the G.I. Bill. Math detoured from preparing young Americans to enter financial adulthood to preparing them to enter college. Money basics gave way to the college prep track: algebra, geometry, trigonometry, calculus. These days, getting financial education into high schools is a tough sell because it competes for shelf space with college requirements.
This has shortchanged a lot of our young people (sorry for the pun). We need to focus on the 100% of them who go on into adulthood—not just those who go straight into college. We know how to put personal finance back into education—thousands of teachers and schools and nonprofit organizations (including mine) do so daily. We just have to put in more effort, make room within the existing constraints, use math problems that, as Hamilton’s Essentials explained, “reach out … to include [the student’s] contact with the larger spheres of social and industrial life.”
In fact, if you update the income amounts and prices, those old problems are perfectly transferable to 2017. The boy who shoveled snow for 30 cents and bought a knife for 25 cents in 1918 has positive cash flow, just like today’s girl who works 10 hours in the mall for $90 and buys jeans and a top for $80. The numbers are different but the goal is the same: financially capable young adults.
And we know it is possible because we’ve done it before–those children made it through the Great Depression and grew up to become part of the Greatest Generation.
As originally seen in the Wall Steet Journal, http://on.wsj.com/2ky3AUn