Who was Your Teacher?
Who did you learn from about money and personal finance in your life? Parents or grandparents? School? Or no one, aka the School of Hard Knocks? April is National Financial Literacy Awareness Month in the United States so it’s the perfect time for each of us to be thinking a bit more about our own personal experience as well as where we are currently in our financial journey in life.
The History of Financial Literacy Education in the U.S.
On this topic of financial literacy, it makes sense to ask: Why don’t all schools teach financial literacy? Everyone seems to agree that this subject has a direct impact on day-to-day living yet is basically ignored in the K–12 curriculum of most of our states. I recently learned that it wasn’t always this way. Throughout the first half of the 20th century, financial education was taught in schools, with a particular emphasis on teaching girls! Back around the time of World War I, when American women began attending college and participating in the workforce in then-record numbers, they had less time to perform household duties, so they needed to economize in the home. In an effort to do it all, and do it faster, they turned to the popular science of the day, in particular the “Efficiency Movement.” In essence, how could Henry Ford’s recently created approach to assembly lines be applied to housework?
At the same time, activists were arguing that for women to be on the same financial footing with men, they needed to learn money basics like budgeting and saving. So, in Home Economics classes, in addition to lessons on how to darn a sock and where to put the salad fork, girls were being taught basic bookkeeping, budgeting, and check writing. Then after World War II, home ec class became less focused on economic independence for women. In the cultural upheaval of the 1960s and ’70s, disparities between the sexes—like the fact that women weren’t allowed to get a credit card in their own name until 1974—became a big part of the public debate. Home economics curricula appeared out of step and even sexist, so those classes were cut. In a classic case of throwing the baby out with the bathwater, financial education got shown the door too. It wouldn’t stage a comeback for another 25 years.
In the mid-’90s is when the interest in teaching financial literacy resurged. Congress passed the Financial Literacy and Education Improvement Act in 2003, setting up a commission tasked with making a plan for raising financial literacy nationwide. Today, about half of our states require some form of personal finance instruction for high school students, and momentum is growing this year as more states have made similar proposals. Perhaps COVID created the awareness that the ability to use money wisely is a life skill along with the realization that it’s important for all ages. As someone in the financial industry, I see daily how using money as a tool in life is really about life-centered planning…what we value and want in life should drive how we use our financial tools.
The Odds are Against Us
And when it comes to personal finance for women specifically, I always acknowledge that we have the deck stacked against us for so many reasons. We often earn less than men over our lifetime (for a variety of reasons but may be related to the fact that we are usually the caregivers for children, aging parents, or spouses). We are more likely to be single parents and are likely to spend our final years alone. In fact, I read a startling statistic the other day: 69% of American women are currently living without a spouse/partner. And the final game changer is that we are more likely to live longer than a spouse (depending on your circumstances, household income typically goes down 30-50% after loss of a spouse). I am not sure if all of that combined is like a double or triple whammy, but it sure reinforces the need for women to be aware of our personal finances!
Five Stages of Change
Awareness is certainly the beginning phase of taking action to improve anything in life, our knowledge or comfort level with finances or otherwise. There are actually five stages in any change process. It’s super important to realize where you are in that change process in order to help yourself get to the next stage and actually get something accomplished. Let’s see where you are when it comes to financial literacy:
Stage 1: Precontemplation
This stage involves being unaware or in denial that there is even a need for financial literacy. If you are reading this, you are beyond this stage.
Stage 2: Contemplation
You acknowledge the issue and begin researching the time and effort required to implement a solution. At a minimum, as you read this article you are already in this phase.
Stage 3: Preparation
Here is where you are feeling ready to commit to making a change. You are open to the future benefits you know will come from creating an action plan. Is this you now?
Stage 4: Action
You have identified and take visible actions on the changes necessary. For example, do you have a good sense of your basic financial foundation, i.e., an awareness of what is in your financial toolbox? Or have you focused on areas of your financial life that need more attention?
Stage 5: Maintenance
Any new behaviors (updating your net worth statement annually, reviewing your investment portfolio quarterly, tracking your expenses, etc.) are now a part of everyday life. They have become habits, just with differing frequencies. I hope you get to this stage eventually if you aren’t already!
So what Stage do you find yourself in? Each of us always has a little, or a lot, of room for improvement, so find where you are and ask yourself what you need in order to get to the next Stage.
This article was first published at 60 and Me – a community that helps women over 60 live happy, healthy and financially secure lives.