So, with all due respect to great (and patient and well-meaning) math teachers in high school and undergrad, I simply can't be the only person who is appalled that the U.S. school systems aren't teaching young people the quantitative lessons they truly need -- like now to calculate simple interest (ala your Bank of America card), how to create a realistic household budget, how to appreciate the incremental costs of a wedding if you invite your best friend's sister's boyfriend's brother's girlfriend (and if you have a cake and a dessert station), or how to save hundreds of thousands of dollars in unnecessary interest charges by making extra principal payments on your mortgage.
I've learned all of these lessons the hard way, and my mistakes have been many. But I'm hopeful that our younger generations might actually take a cue from the struggles of their parents, and that educators might start building curricula that include practical lessons for financial responsibility. One can at least hope.
Hey, baby. What's your...FICO score?
If you are a parent, I beg of you to teach your children just one lesson about dating and choosing a life partner. Forget astrological signs, and focus on character traits that you can take to the bank. I am far less interested in the fact that my husband is a Virgo (mutable, social, earthy -- whatever the heck that means!) than I am in his credit score and his retirement planning strategy. (And, yes, I did ask to see his credit report about three months into our relationship.)
To be fair, an approach to dating that is this pragmatic is bound to send some suitors packing. And good riddance to them! These days, most couples -- and I don't think this is an exaggeration -- are less scrupulous about who they have sex with than they are about who they would bare their bank account and credit report to.
Why is that? I think it's because so many of us never got "the talk" that really mattered. Sure, we heard some awkward explanations about the birds and the bees, but most of us never got schooled in the virtues of protecting our financial health. We learned about HIV, but not about bankruptcy. We might have learned how to balance a check book, but we didn't learn about 401(k) plans until after our first employers asked us to make elections (and we all went "um, what...?"). We didn't learn about credit card debt until our college years. And we didn't learn about the pros and cons of renting vs. owning a home until we'd fallen in love with the most adorable little condo near the lake.
Shame on us. And shame on the parents and teachers who should have prepared us for the financial realities that awaited us.
Silver Lining
This past year might go down in history as "The Great Recession, " but for those who were really paying attention, it was "the great education." It was the wake-up call that so many of us needed. It reminded us that credit card interest rates can go from 2.9% to 29% without warning; that good, highly educated, well-paid people can and do lose their jobs; that dream homes can lose equity (ours lost $50,000 in value this past year!); that not having a down payment for a car might now mean that you're taking the bus; and that your greatest defense against the disintegration of your marriage might be a healthy, honest, conservative financial plan that you both share.
So, I'm glad that this past year happened. It put irresponsible companies out of business. And it got Americans to slow down their spending and start putting their pennies in their savings accounts. It got me and my husband really talking about priorities and investments (and spending more quality time together, and less time and money at concerts and events where we can't even hear each other speaking).
With luck, there are great days ahead for all of us. Here are my financial tips for 2010:
1. Learn about the new FICO scoring system. Our days of ignorance are over.
2. Run your credit report (and your spouse's or future spouse's). Sit down together with a highlighter and a pen, and get honest with where you've been and where you're headed. Focus less on being ashamed of the mistakes you've already made, and more on the lessons that will take you forward.
3. Make a household budget. It doesn't have to be complicated. But it does need to have steadfast rules, timebound goals, and realistic parameters.
4. If you're a teacher -- especially a math, economics, accounting or finance teacher -- remember that the lessons you teach will change lives.
5. And if you're a parent, I beseech you... While you might think that giving your 14-year-old an iPhone with unlimited internet access and a texting plan makes you the "cool" mom or dad, doing so without making them responsible for part or all of the bill that they incur is -- I promise you -- going to backfire on you. Picture that teenager, 15 years from now, living in your basement still and making excuses for why the bank won't loan her the money for a decent car and for why the government is chasing her for her delinquent payments on her student loans.
Hell, I don't have an iPhone -- or even a knock-off -- with a data plan. Would I like one? Sure! Does it fit into my budget? Nope.
When it comes to wealth, I'm not a believer in winning the lottery or "marrying rich." Your financial destiny isn't destiny at all -- it's the result of applying the street smarts you'll probably need to pick up on your own. Because none of your teachers thought you needed a roof over your head as badly as you needed to take that foreign exchange trip to Paris.
**sigh**
