I know, I know, grade school was a long time ago for most people reading a personal finance blog, but I am going to walk down this path anyway – maybe a worthwhile money lesson was hiding in my youth.
The three things I remember learning in grade school about money – How to balance a checkbook, something loosely tied to compound interest and if I went to college I will have student loans until I am 40.
Money Lesson number 1 – How to balance a checkbook
Sometime before I got my drivers license I took an elective “personal finance” class in high school, the course title was generous based on what I took out of it. Literally the only thing I remember was being taught how to balance a check book. The biggest project was following a mythical persons expenses for a month and seeing if the balance was correct at the end.
Internet banking was a real thing at this point in time and I figured why not let the computer do the math for me….. To this day, I have never balanced one.
The first time I got a check book with those little carbon copy pages I forgot to put that piece of plastic under the first check and ruined the next 10 CC pages.
Lesson 1 – fail
Money Lesson number 2 – How powerful compound interest is
*Disclaimer* This example has been blogged about extensively – even found this gem from Budgets are Sexy (I had this post 90% written when I decided to google the example and see if anyone else got the same lesson). I am going to tell my story quick and skip all the fun doubling math.
Bringing myself way, way, way back to the 5th grade for this one – 1990 something – my teacher posed this question:
Would you rather have $1 Million today, or a penny that doubles every day for a month?
Unsurprisingly to most, all 30 hands go up saying they want $1 Million today! What can I buy with a penny? $1 million buys a lot of baseball cards (not sure what kids buy these days – probably something way cooler than I had back then).
Long story short – doubling a penny everyday ends up being over $10 million (if you haven’t seen this example before, check the link above).
Yep, bunch of chumps would take 1/10th the payout.
Its not a realistic example of compound interest, being 100% returns and all – but you aren’t investing a penny either.
Lesson 2 – Valuable!
Side note – I remember being pissed off that my 1990s calculator didn’t have enough places to multiply the pennies half way through the month and wasn’t impressed that I had to do it by hand
Money Lesson Number 3 – You will have student loans until you are 40
My 7th grade math teacher, I don’t remember his name, but he always wore a sport coat with tennis shoes. Its a classic look.
I don’t know why, but this is the only thing I remember him ever saying to us “You will have student loans when your 40.” His reasoning was something along the lines of everyone that went to college still has them, I still have them and your parents still have them.
Motivator of the year, really wanted to go get a degree after that pep talk!
Proving him wrong would be a little more satisfying if I could email him when I was done – I will spam TennieRunnerSportCoat@(All email servers) until I find him.
If that time would have been spent showing us what an extra $100 payment towards his balance every month would have saved him.
Lesson 3 – Fail
Why Blog about this?
I promise I am not trying to waste your time – outside of the obvious reasons (the internet destroyed checkbooks, compound interest is cool and some teachers are bad motivators) – there are a few other things that I want to highlight:
Need for instant gratification – The penny example above is obviously an extreme example, but this mistake is still made on a daily basis by the masses. Spend a dollar today instead of investing it for tomorrow.
Everyone is in a different situation – We all come from different financial backgrounds, there are legitimate reasons to not save/invest your money now, as there are legitimate reasons to take the money today vs waiting 30 days.
Young people aren’t being educated about $ – The best money lesson I remember from grade school was in 5th grade – personal finance will affect everyone consistently in their lifetime and it is completely ignored. Everyday I read blog comments saying “I wish I started doing this earlier” – and unfortunately it takes a series of financial mistakes for many people to wake up and start learning.
I could grab any of the 20 blogs I read consistently and students could learn more in 1 afternoon about money than I did in 10 years of schooling.
Action Items: Teach someone something about money (preferably a young person that can benefit early). Any money lessons from grade school that you remember? I am curious if anyone had similar experiences (good or bad)
Some products that can help you:
Personal Capital: Personal Capital has a ton of great Free features, you can track your spending, net worth and even analyze your portfolio. It has top notch security and I am able to connect all of my accounts. Saves a ton of time!