9 Financial Lessons People Learn in High School — Did You?
Whether it be in the classroom or via real life experience, high schoolers get the chance to learn and apply a lot of the basic tenets of personal finance and money management. Some of them apply and retain the information, while others ignore, forgets or simply misunderstand it. (See also: The 5 Most Important Financial Lessons People Learn in High School (Did You?))
Which way did you go?
Check below for the nine financial lessons most people learn in high school, and then ask yourself: are you (financially) smarter than a 12th grader?
1. Money Is Difficult to Come By
Many people who grow up with loans, credit cards, and other forms of debt have lost their understanding of the value of money. Money is valuable for a reason; because there is a finite amount of it. With a culture that relies so heavily on credit and debt to compensate for the finite nature of money, we tend to lose sight of the value that it really holds. High schoolers learn this by having to work for their spending money, or by receiving an allotted sum from Mom and Dad, and once it's gone, it's gone.
2. Budgeting Is a Weekly Task
Budgeting for your expenses is not a one-and-done proposition. In fact, budgeting on a weekly basis is the most prudent way to handle money, since expenses (and sometimes income) can change from week to week. Teens and young adults have to do this to pay for their gas, entertainment, or other activities they want to participate in. As adults, our approach should be no different.
3. Saving Money Is a Slow and Consistent Process
High schoolers who do try to save money learn that it's a slow and incremental process, where small contributions add up over time. Trying to put large sums of money away all at one time will be difficult, and though possible at times can cause morale to sink whenever the process can't be repeated. The trick to saving money is putting away just a little bit at a time over a long period. Consider an automatic transfer from your checking to savings account every week, set to something small like $20.
4. It's Not Always Easy to Get a Job
Teens with little experience and low job-skills know the difficulty of finding good work. Jobs, though widely available in most cases don't exist in a vacuum. They exist because someone else is making money and needs people to help them make more money. Otherwise, neither you or anyone else would be getting hired. That means in reality, a job is a precious commodity that's difficult to come by.
5. Frivolous Spending Should Be Limited (and Cash Only)
When the money set aside for going out on the weekend is gone, that's the end of the fun. At that point, most high schoolers need to go home and do something that they don't have to pay for. That's a lesson that's harder to learn when you're an adult, especially when a swipe of the credit card makes you feel like you never run out of money. But it once again highlights the importance of living by a budget and within your means.
6. A Cheap Car Can Be a Good Thing
Remember when you were happy to have any car that would get you from point A to point B? Those were good times (good enough for Brad Paisley to write a song about them),and highlighted the practicality of avoiding a car payment and paying for your car in cash.
7. Saving for Retirement Can and Should Start Early
Many teens have money put away in a long-term savings account by their parents. Starting a long-term savings plan that early in life means that their money (if invested wisely) will grow at a steady rate and become a significant amount depending on the amount of cash and investment type. The key though is to understand the retirement savings options and start early.
8. Personal Finances Are Closely Tied to Personal Freedom
The less you're in debt and the more you're able to stretch your money and budget for the things you want, the more personal freedom you'll have. Teens learn this quickly as they begin to drive and take on small financial responsibilities. If they carry it into adulthood the benefits are far-reaching, often helping them avoid taking on too much debt or developing lifestyles that can't be maintained by their income.
9. There is No Such Thing as a Free Lunch
Popularized by Nobel Prize-winning economist Milton Friedman, this simple phrase is often echoed by fathers in the hopes of instilling a strong work ethic in their kids. The phrase itself is meant to quickly articulate the idea that nothing in this world is truly free. Though people might give you things for free, those things still required somebody to work and pay for them. Whether we agree with it or not, it's one of the harsh realities that we face living in a society built around economics and the free market. Teens learn this quickly as they begin to transition out of their parents house and into the "real world" where nothing is paid for, and they're now responsible for most of their own expenses.
What financial lessons did you learn in high school? Do you think more emphasis should be put on real-life finances and budgeting in high school? Let me know in the comments below.