How Can We Teach Our Children/Students to Be Financially Adept?

According to a summary of available research, the answer is to teach them MATH (from WSJ):

We focus on teaching finance in school when regular math is much more effective at helping children manage money. We cram their heads full of financial facts and strategies years before they’ll actually need any of it—ensuring that they won’t remember the lessons when they’re most needed. And we squirm about discussing our own family income and debt, giving children fears and false impressions they may never shake off.

Other insights from the article:

  • Impact of financial education on outcomes is nebulous:  “I teach finance for a living, so I want to believe that financial education works,” says Mr. Cole (finance professor at Harvard Business School). “But, really, across every data set we looked at, across every population segment, we just couldn’t find any effect of financial education on behavior.”
  • Math had strongest impact on financial outcomes:  “But the study, issued last year and currently under revision for publication, did find one school subject that does have an impact on students’ financial outcomes: math. Students required by states to take additional math courses practiced better credit management than other students, had a greater percentage of investment income as part of their total income, reported $3,000 higher home equity and were better able to avoid both home foreclosure and credit-card delinquency.  “A lot of decisions in finance are just easier if you’re more comfortable with numbers and making numeric comparisons,” says Mr. Cole.
  • Just-in-time education critical:  “The professor believes his findings lend support to an increasingly popular strategy among financial educators and policy makers called “just in time” education. Instead of teaching all elements of personal finance at once, “just in time” education gives consumers the knowledge they need just as they are about to engage in a transaction. So, instead of giving information about car loans to students in a textbook, consumers would get the information as they started shopping for cars.”
  • Importance of frank conversations with parents:  “Over time, children who don’t get straight answers tend to think about money in purely symbolic terms, giving it more emotional weight than it deserves, he says. They may end up looking at the world through costs and benefits, rather than social rules of reciprocity. This can limit the ability to develop close relationships that would help people cope with problems in a way money cannot.”