Tuesday, February 2, 2010

A Case for Financial Literacy

As I waited for a BART (Bay Area Rapid Transit) train, a girl of about 13 sat next to me, frantically filling in a homework assignment. She would write, then erase, write on a piece of scratch paper, then erase. I noticed that her eyes had filled with tears. I tried to arrange my face into one of those “You can talk to me if you want, but I am not trying to pry” faces which apparently worked because she looked up and said, “Do you know anything about algebra?” My heart sank. Yes, I know a lot about algebra—I know how to get an “A” in every subject but a “D” in algebra. I know the feeling of just not being able to make heads or tails of these equations that were a stream of letters and numbers where X was to mean something, but what? And who cares anyway?

But I summoned my courage and my self-esteem and thought “I am 56 years old. Of course I can help this kid with her math homework.” I said, “Well, I can’t promise but maybe together we can figure it out.” We got on the train together and I spent the rest of the ride helping her. As it turned out, I could help. The problems were mostly fractions and I am good at fractions and she knew more than she realized. She got off the train beaming.

I know algebra is useful, but I was struck by how much time this young woman will spend learning algebra, then calculus and then trigonometry, and how little time she will spend learning math skills she might use every day in real life. Far better for her to have spent her time figuring out how much her ride on BART actually cost compared to what she paid, or how much tax money is spent for her to go to public school for a year compared to how much is spent to keep someone in prison, and then asking what should X (where X = dollars spent) be spent on?

Braun Mincher, author of “The Secrets of Money: A Guide for Everyone on Practical Financial Literacy” notes that a 2007 survey commissioned by the National Council on Economic Education, shows that only seven states require high school students to receive financial education. Yet almost all schools require trigonometry, which few of us ever use after graduation.

An on-line consumer survey by Mincher showed that only 50% of those who took the survey knew that property taxes and mortgage interest are tax deductible, only 32% knew what required deductions were taken from their paycheck, and only 33% knew what “annual percentage rate (APR) meant. With little or no knowledge of these simple financial facts, how will people decide about more complicated ideas, such as whether sales tax is regressive, or whether banks should be given bailout money? I hope my young friend gets an “A” in algebra but I also want to make sure she doesn’t get an “F” in financial literacy.

1 comment:

Amal Douglas said...

I think a compulsory mathematics syllabus is really based around arithmetic (addition, subtraction, multiplication and division) and being able to do that with whole numbers, negative numbers, frsctions and decimals. Add a basic introduction to algebra (we all have to find X at some point) and ensure they know something of weights and measures and that's more than enough to get most people through and a great start for those who after an aptitude for it.