My youngest is a high school senior, which means she’s looking at colleges. Which means I am, once again, looking at colleges. Which aggravates me, but not just for the reasons you might think.
I went to college — after 12 years of formal schooling and a few years of full time employment — but in all those years of ‘education’, I was never taught about the one thing that’s made a significant positive difference in my own life and in the lives of the people I care about.
Sure, in elementary and high school I learned to read and write, to name a few elements in the periodic table, and to dissect a frog. In college I learned a few things about graphic design.
But I was taught virtually nothing about money, practically nothing about starting or operating a business, and 100% nothing about personal finance. Everything I was taught was intended to deliver one thing to me (or rather to deliver me to it): a job. More specifically, a job with compensation provided in the form of regular income. What aggravates me is that in 2017, getting a j.o.b. is still basically being pushed as the primary reason to go to college.
Learn to play, or get played.
Many college websites tout the average starting salaries of graduates in their X, Y, or Z programs. Setting aside for a second that training solely for a salaried job in today’s gig economy might be a bit of an antiquated notion, earning a paycheck is certainly not a bad thing in and of itself, but it’s absolutely NOT the best / smartest way to earn money.
The US Tax Code virtually screams at us to earn forms of income other than the regular kind if we can avoid it. The system is heavily slanted to favor capital gains or qualified dividends, which is kind of at odds with the idea of sinking $140,000+ in after-tax dollars and four years of lost opportunity cost into a degree that might set you on the road to making $50,000 per year in regular income once you graduate.
Is there some reason kids aren’t taught that the rules around taxation tend to be created by politicians and their advisors who typically earn not just salaries, but capital gains, carried interest, qualified dividends and other tax-favorable forms of income, while they loudly promise to create ‘jobs’ (ie regular income taxable at the highest rates) for the masses? And are they clued in to the idea that higher education is essentially structured to provide workers to fill those regular income / highest tax rate jobs, while charging massive fees to do so?
Don’t get me wrong, education is a powerful thing. At its best it’s about self-actualization and personal fulfillment, but education is also held up as a path to a more prosperous life. So when it fails to inform young people that solely earning regular income is about the dumbest thing they can do as productive members of society, it’s incomplete. And it fails again when it neglects to inform young students that while the personal finance game may be rigged against regular income earners, with just a little knowledge they might just be able to play a whole lot smarter.
Design your dollars.
Maybe along with reading, writing and that third thing I can never remember, kids should be continuously educated about personal finance and the systems that govern it. Maybe by the time they’re ready to choose a college / career path, they should at least understand that going through 21st century life armed solely with knowledge rooted in a 19th century education concept is massively risky. And—because clearly not all dollars are created equal—they should definitely know that they can, to some extent, optimize their lifelong income by designing the ways in which it’s earned.
I was lucky. When I was about 18 or 19 (a year or so before I went to college) someone sat me down and explained a few of these concepts to me. I actually listened, and I took steps to learn not only a profession, but to do my best, starting from essentially zero, to at least try to gain some reasonable knowledge of personal finance and to try to engage in it the same way the people who make the rules do. I’m still learning.
Of course I want my kids to be educated in order to be able to pursue their personal strengths and passions. But I also want them to understand the rules of the game they’re going to be playing for the rest of their lives.