There's Something Wrong With Our Financial Education

Finance Tid Bits

There's Something Wrong With
Our Financial Education

20th June 2007

Why do I say that? Has anyone looked at the Forbes 400 richest Americans list? If you look at the self-made billionaires and millionares on the list, most of the top ones are college drop outs. These guys didn't finish their degrees or masters. What that means is that they didn't finish business management or financial management heck they didn't even finish economics management that is required to earn you a finance, business or economics related degree. Why then are these guys way wealthier than those of us who completed MBAs and BSc degrees in all sorts of wonderful things?

Finance Tid Bits For a long time I've been trying to make sense of Robert Kiyosaki's comments in his book Rich Dad Poor Dad. He kept referring to how we are stuck in an ancient educational system. When I reached the turning point in my financial life, suddenly it hit me. Robert was right. Our educational system has not evolved with our world. Even our principles in terms of what we are taught at home have not evolved with the economic situation. We are taught go to school and get good grades then get a good job, get married, have lots of kids and get a big house. Doesn't that sound like the ultimate American dream? Well there's nothing wrong with the dream, however there is something wrong with how to attain that dream. Our education system is not teaching us financial intelligence for your personal finance. They don't for example tell us that there are several types of mortgages available to you when you buy your home. They don't tell us that when the bank says 10% interest for your savings account it's not 10% every month but rather 10% divided by 12 months is what you actually get per month as interest. The 10% is an annual percentage.

They don't even tell us how the shift in interest rates or economic conditions have a direct impact on your personal finance. For example if interest rates are low, you and I have more disposable income therefore we have more buying power. When our buying gets out of hand, in order for the federal bank to curb our spending, they increase interest rates. When interest rates go up, suddenly our repayments go up and we have less disposable income so we can't afford to go on a buying splurge anymore. Things like these I was never taught in my business management course. Fine, they teach us the principles and so on but they don't use practical everyday examples to explain to us how all this affects our personal finance.

Perhaps we are brainwashed by our education. Maybe those that didn't go through the brainwashing, that is the drop outs who went on to become billionaires see something that we are trained NOT to see. Or perhaps they know something we don't or that our teachers don't either. Either way, there's something wrong with our education. If there weren't why aren't accountants, brokers and bankers as wealthy as the people whose money they manage? Those of us who have graduated at the highest levels with degrees, masters and doctorates why are we struggling financially? Why aren't we billionaires like the likes of the Gates, Buffet and company? By the way on the top 5 list of the Forbes 400 richest Americans only one has a Bachelor Arts/Science and a Masters of Science and he is Mr. Warren Buffet. The rest namely, Bill Gates of Microsoft, Paul Allen also of Microsoft, Michael Dell of Dell Technology and Computers, and Lawrence Ellison of Oracle Software are the other four and they are all dropouts!

Most of the world's weatlhiest people are actually quite illiterate but that does not mean they are ignorant, PLEASE make no mistake on that one. They are more wise and financial intelligent than 90% of the population. Speaking to these people even just for 30 minutes opens your mind to ideas and philosophies that you wouldn't otherwise think of by yourself. They see things in a different light and it's amazing how they look at the same things in life that we do but with such an extremely different perspective. I think my college education has been my financial downfall, however experience and spending time with the wealthy is changing my financial destiny. So will you start to learn afresh or will you continue on your path? The choice is yours.

"The prudent see danger and take refuge but the simple keep going and suffer it. " - Proverbs 27:12 (NIV Bible)

Comments (6):

Joan Says: Kevin you have stressed a point I always tell my friends about. We are being educated based on philosophies that no longer apply to our way of life I agree totally | 06.20.2007 |

Robert Says: You are right Kev. We need to start being taught personal finance from a young age in schools all the way to college | 06.20.2007 |

Vince Says: That will reduce the debt problem faced by US consumers Robert | 06.20.2007 |

Rochelle Says: Great post Kevin. Though if you do't want to do anything about improving your financial education no one can help you. Its the issue of you can take a horse to the water but you can't force it to drink | 06.20.2007 |

Felix Says: Those guys are dropouts because they saw an opportunity and realized continuing with college would be a waste of their time. They were too smart and they knew it but that doesn't work for everybody. I think our education goes wrong in that it doesn't open our minds to see the type of opportunities that Bill Gates and them see everyday | 06.20.2007 |

Casey Says: That is true. For some reason the more education you have the less likely you are to be thilthy rich like those guys that own the Dells and Microsofts | 06.20.2007 |

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There's Something Wrong With
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