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Tuesday, February 19, 2008

Yeah or Nay? Financial Education in Orthodox Schools

There is an idea I've seen floated in various frum publications, at various blogs, and in the comments section of this blog that financial education should become a standard part of the curriculum in Orthodox Schools. ProfK, in the spirit of activism has asked her readers to "Send a note to your high school and tell them that you believe that a course in practical living is essential. Tell them you would have liked such a course and that you really needed such a course. Tell them that many shalom bayis problems center around money, and that a course in high school might cut these problems way down. Lay out some of the general areas that such a course should cover, like budgeting and what the real costs of living on credit are."

The trend follows that of the general public as more and more middle schools and high schools across the nation are introducing courses in personal finance into the curriculum. I believe most high school students in the US have always taken a course in Economics, micro and macro, but this type of course is centered around supply and demand graphs, not 1040's, budgets, credit, and financial tools. At my high school, Economics was a high school graduation requirement. Seeing some of the ridiculous complaint letters in the Yated regarding the price of camp and the price of pizza, I think an academic economics course would be a fine addition into an Orthodox Yeshiva/Day School education. Supply and demand theories, the drive for profit, etc, shouldn't be a mystery to the yeshivish consumer. I do not believe any of the local schools where I live offer a course in economics. I'd say that is a shame.

But back to the subject at hand, teaching personal finance in Day Schools, Yeshivas, and Bais Yaakovs. Yeah or Nay?

The arguments for yeah are obvious. Learning how to handle money (and the relevant halachot) is essentially for daily living. Not knowing the basics can lead to serious shalom bayit problems. I know of people who have gotten in over their head tax wise because of mistakes when filling out a W-4, or because they didn't know they were responsible for their own taxes as contractors. I certainly do not want my children to walk out of my own house without knowing some halachic basics, some tax basics, some budgeting basics, some savings basics, some investing basics, and some smart shopping basics. But, I have no fear they will leave my house ignorant because we make it a regular point to speak about choices. And as they get older we will start to involve them in banking and tax preparation.

But, as most of us have learned, running a fiscally sound home is really far less a function of knowledge and far more a function of BEHAVIOR. I can reconcile accounts, calculate amortization schedules, and engage in tax planning and savings (marginal tax rates, retirement, Coverdell IRAs, 529 Plans, depreciation schedules, stock options, 1031 exchanges, etc). I know how to invest in mutual funds, stocks, and bonds. But, ultimately, if I can't DISCIPLINE myself, my knowledge is only theoretical, and the unsavvy grandma who just puts her cash "under the matress" is going to live better when that rainy day comes. And, it will come.

Like I mentioned before, personal finance was *not* a feature of my own high school education. But, there is a moment that sticks out in my mind which makes me weary of allowing any teacher (or at least a teacher I haven't grilled to the bone and run a credit report on) to take over teaching about personal finance on my parental buck.

One day during a discussion about debt financing and the economy during my high school Economics class, the teacher veered off into the area of household finances. He mentioned that the guys would probably debt finance a big ticket item in the near future (we were seniors). The example he named was not a home, not a college education, not a first car. .. . . . .but an engagement ring (!). He had no problem with this rather expensive proposal, and seemed to consider this type of debt financing as a "reality" of life (note: outside of the frum world, gifts are generally regarded as the responsibility of the couple, not the parents).

I raised my hand, absolutely repulsed by the idea that a young man (future husband and father) would finance a ring, get married with the debt, and then stick the bill (now a shared responsibility) with his new wife, basically asking her to pay for her own ring! I raised my hand and said: "I'm sure as heck not going to pay for my own engagement ring. If he can't pay cash for a gift, he needs to buy something less expensive or not buy it at all. And, any guy who would surprise his wife with a proposal on credit, would be a surprise of him own." An entire argument ensued in class. The girls tended towards my sentiments. The guys were more evenly split.

My example should be demonstrative of what might happen if we left the teaching of personal finance in the hands of a school: an endorsement of an idea that we as parents might find really repulsive, ideas we would rather our children not internalize as "normal." Even if the curriculum is acceptable, discussion will ensue and personal opinions will be introduced and great weight could wrongly be placed on those unsound opinions; perhaps the idea that Retirement is Goyish, or that your parents want to give you soooooo much and will be more than happy to help you after marriage/if you get into debt/need babysitting, or that there is a mesorah for a chatan to get a watch upon engagement and naturally a young chatan should expect one, or that women dedicating themselves at least temporarily to homemaking is financially impossible, or that "everyone" uses credit--the idea my high school econ teacher was promoting. . . . and he was a good teacher when he stuck to supply and demand graphs).

And, unless a school were to start a personnel hunt for just the right personal finance teacher, I imagine that the teachers that you will get are the teachers you see in front of you right now. They might be great at teaching their subject, but is this a subject you want them to teach too? In some (but not all) cases, that would be enough to ask for a dispensation for my children, as this is a subject I'm more than happy to continue homeschooling.

I think we all know that the state of personal and communal finance isn't very rosy. I vote nay, at least until the state of personal and communal finance in the frum community changes enough that I am more trusting or those who could be teaching the subject and building the curriculum.

You have the potential to be your child's best personal finance teacher, so jump on the opportunities you find.


mlevin said...

For my senior year in HS my parents moved to NJ, and thus I ended up going to Public School for a year. As a trend at that time, schools were teaching teens about baby care and all the difficulties that come with it, hoping that it will reduce teen pregnancy.

As all other public schools, they divided our class into groups of two people and gave each group a baby (egg) to care for, midnight feedings and all that. At the end of the week all eggs were collected back. I can't speak for the whole class, but all those that I socialized with, ended up throwing those eggs on the shelves and did not bother with them until the end of the week. There were no diper changes, no midnight feedings and no problems with finding babysitters.

That little experiment failed.

Another part of that class was budgetting and living within a budget. Each couple was given his/her job with attached salary, and we had to create expenses and live within them. Needless to say, it was waste of time, too. No one took that seriously. We heard comments like: "I won't be a ..., I will be a succesful business man, money won't be a problem" or "Plumbers make more then that, it's a cash job and they don't declare it on taxes"

So, yes, theoretically teaching finances in schools is a great idea, but in practicality it just won't work.

mlevin said...

Unless you plan to have separate his and her accounts/moneys, you paid for that diamond ring even if he paid for it in full.

BrooklynWolf said...

that there is a mesorah for a chatan to get a watch upon engagement

That's actually quite funny... especially when you consider the fact that this "mesorah" couldn't be more than a couple of hundred years old.

The Wolf

Critically Observant Jew said...

To MLevin - I graduated (public) high school in 1999, and when I was in high school, the home economics class had an assignment similar to the one you quote with an egg. Except that the "egg" was a full size, electronic model of a human baby (about 5-6 months old), and the students had to carry them around, and care for them pretty much like for the real one. I remember those electronic babies screaming at high volume when something wasn't done right in the middle of the class (because they were carried around all day). Even though I didn't take that class, I believe it was good for the students who did.

Critically Observant Jew said...

here's the link to what I was talking about:

G said...

As I commented by the dear Profk...this should not be classroom stuff. Schools are not to raise kids and that is where this falls.

The girls tended towards my sentiments. The guys were more evenly split.
Ha!! I call Pinocchio on the young ladies.

How many would turn down the ring?(my guess is an overwhelming minority)

JS said...

I tend to vote "nay" because personal finances tends to be, well, personal. In other words, learning how to balance a checkbook or how to budget is a final technical skill to learn, but what someone uses their checkbook for or includes in their budget varies greatly person to person. For example, my wife and I have an antenna for our cheap 27 inch CRT television. Our neighbors have a digital cable package on a brand new 42" widescreen LCD television. Is one right and one wrong? It's impossible to tell, for us it's not so important to have 400 channels and a huge TV, for them I suppose it is. You can go on and on with these sorts of examples. Also, how do you teach what is "appropriate" to spend money on or what one's financial priorities should be?

Maybe just learning the skills is enough and when they enter the "real world" at least they'll be able to see how much they earn, how much they want to spend and how it's not possible. Or at least they'll know how dangerous credit card debt can be.

Lion of Zion said...


"this "mesorah" couldn't be more than a couple of hundred years old."

or less? as per

Lion of Zion said...

in 12th grade we had to take one semester of economics. the teacher included lessons on personal economics and he we had assignments on keeping a budget, balancing a check book, understanding credit card debt, etc. (i don't know if this means anything, but she was not orthodox and was actually quite iconoclastic altogether for the school.)

true story: i decided i wanted a checking account when i was in high school. i went to my local bank, but they denied me because i was not 18. so i went to another bank and was denied. etc. eventually i went to a bank where the guy could not tell if my birthday made me 17 or 18 and he gave me the account.

ok, i thought that was funny.

ProfK said...

Here's whereI differ from G and some of the others commenting. Yes, ideally parents should be the ones who teach their children how to balance a check book, how to read financial statements, how to read credit agreements and how to make wise decisions about budgeting and purchasing. Some parents can do this because they know how to do these things themselves and because they are actually role models of what they might teach. But what of the others?

We know that huge numbers of families in the frum communities are debt ridden. We know that some have "bought into" a lifestyle that they cannot sustain given their income. Playing "keeping up with the Schwartzes" is all too common. And these are the parents you expect will teach their children fiscal responsibility? First they would have to learn it themselves.

Schools should offer a course in "practical finances" that teaches some basic approaches to organizing personal finances and things such as balancing a check book. I agree that some personal choices--re the television example someone gave above--are just that: personal. With so many of our frum men and women in finance and accounting and related areas, do you suppose they could volunteer once a week in their children's schools or even work for a few hours? There should be enough qualified people out there.

Of course, getting the schools to admit that "practical" and "finances" belong in the same sentence is something else.

Charlie Hall said...

"great weight could wrongly be placed on those unsound opinions"

If the people designing and/or teaching a personal finance course comes from the idea that retirement is goyish or there is a mesorah that a chatan gets a watch, such a course will do more harm than good.

Off topic but perhaps worthy of your attention:

rachel said...

if you don't want to include home economics in school, then do it in seminary or yeshiva when the kids are more mature. You can't rely on the parents because many of them are so ignorant about it.
In any case, every organization that giges tzedakah to the poor should have home economics as a pre-requisite for recieving tzedakah (some do it in Israel). Otherwise the people will just take the money buy junk food and soda for Shabbos and wonder why they don't have anything left to pay the heat (or make any other type of bad desicion)

Zach Kessin said...

Am I the only one who finds reading responses on TYW painful? If for the total lack of grammar if nothing else.

Anonymous said...

I think that it's all very well and good to teach theory in school, however for "tachlis" the parents need to be teaching their children from the time they understand "value". We can't delegate that responsibility to strangers.

Zach Kessin said...

I agree with Charlie, While I like the idea on paper if it is taught by people who have the average rw orthodox view of money It may do more harm than good.

mlevin said...

I know a man who is a professional financial planner and is $700,000 in debt. Imagine him teaching finance to our children in school.

SephardiLady said...

With so many of our frum men and women in finance and accounting and related areas, do you suppose they could volunteer once a week in their children's schools or even work for a few hours? There should be enough qualified people out there.

I would happily volunteer time, but I'm fairly certain the school isn't so interested in my time (since I once brought up the important and they just didn't see it).

That said, I do think math teachers should add in some practical math. Reconciliation word problems could be part of algebra. Calculating what a $1000 watch bought at 17% credit or what $5000 saved at 5% interest would be in 3 years would make math more practical and hopefully more interesting.

Adding financial math in a curriculum would let the numbers speak for themselves.

Regarding seminaries: Our seminaries ARE teaching finance. .. . but they are teaching bitachon and emunah basically exclusively. I think their agenda is also different. So, I'm afraid those parents interested in introducing something that accounts for the practical reality are going to have to find a way of teaching such.

Parents could hire an frum accountant or financial planner they trust to give summer classes. That is an idea. But I still think demonstration of frugality, delayed gratification, etc will leave the biggest lasting impression. Also, parents whose children earn money but don't pay their own way should set up expectations about what can be spent, what must be saved. Otherwise, kids can easily turn into consumers quick and, unfortunately, become "addicted."

Esther said...

I don't feel that this is a frum issue but rather a general societal issue. In any case, if the parents are presenting poor examples, there is nothing that a lecture in school is going to accomplish. It's the adults who need to be educated, rather than be given horrible financial "advice" when making life decisions such as whether to learn full-time or when to get married.

That's a great comment you made to your high school class!

Anonymous said...

Education is a must. "Personal" finance is "personal" until that person starts using public monies (loans, etc). However, there is an unfortunate lack of interest in these topics. I organized a Personal Finance Series last fall on 3 relevant topics: mortgages, savings, and investment vehicles. 4 ppl showed for the first event, and 2 each for the last two events. This was publicized to two shuls. Of course, the people this was targeted did not show up.

**Is this only in my town, but I am now hearing stories how there are ppl in the community who do not pay their kids' tuition in the schools...rabbis, etc - can this be??? Is this not ignoring one's personal financial responsibility to another person? After all, those teachers depend on that money for tuition, etc...**

ProfK said...

Re "I don't feel that this is a frum issue but rather a general societal issue." It's more of a frum issue. Plain and simple, it costs more to be frum then not. The general public is not paying private school tuitions, which is what yeshiva tuitions are. Their food costs are lower. They have a broader choice of where to live, so housing costs are lower. Even if these parents are not particularly good money managers their indebtedness is going to be way less. Yes, society, both Jewish and not, is too materialistic, too much into gratifying every desire, but frum jewish "desires" cost more.

Mike S. said...

As I said on ProK's blog, my exprience with this does not make it seem to be a good idea. I think some things are best learned by experience. My children did have a course on budget and check balancing etc in high school. But they didn't really learn to do that until the first time they bounced a check, or until they had to call home for a bail out when they ran out of grocery money. After that, they learned to budget and balance the checking account.

It probably helped that they had to spread their summer job earnings for entertainment, clothing beyond the necessities, and eating out during the school year while still in high school. They at least understood that money is finite, even if they didn't quite understand the need for a reserve.

I still do their taxes, and probably will until they graduate and get full-time jobs.

Ariella said...

You were a gutsy teenager, I see. Good for you! I think in the frum community, it is now more common for the parents to assume the cost of the engagement ring, as well as many of the other expenses involved. You know how the diamond ring sellers promote the notion of two months' salary as a guideline? Well, for many young men who are studying full time (whether in yeshiva or college) when they get engaged that would amount to $0. So it seems the salary gauge is more of a function of the bride's expectations.

I also want to say that I agree completely with ProfK's comment.

anonymous mom said...

I taught consumer ed for years as part of my 5th grade curriculum. It fits beautifully with the hands-on math approach. We learned about credit cards, calculated fines for late payments, budgeting, comparing prices, price per unit, budgeting, mortgage payments, balancing a checkbook. There are great materials out there for teachers on this subject--materials that parents can use at home too. This month's issue of Family Fun has some great money matters tips for parents. But, as for making a dent in the right wing Ortho communities, the best way is to get Rabbinic endorsement for personal finance, management and budgeting classes for men and women to take place in the Shuls. Any financial stuff you teach the girls--which may or may not be approved--is useless if the boys aren't taught these things too and they will not be because of the ever-popular "Bitul Torah" excuse. They no longer have a proper secular studies curriculum or even a marginally acceptable secular studies curriculum. There is no way to get approval for this in this climate. And the "men" that the Yeshivos are turning out are completely unprepared to provide for their families or understand what is necessary to do so. The Yeshiva world has no interest in educating them about this as it conflicts with what they are being encouraged en masse to do, which is to sit and learn. Rabbinic approval for free lectures in Shul to separate seating audiences given by financial planners and accountants in our community. That's the best we can do now.

SephardiLady said...

Ariella-Being outspoken seems to run in my family.

Esther-I agree with you that many of the financial issues I have addressed on this blog are also problems in general society. The difference is that frum life is more expensive and that once a frum person is in trouble it will be a lot harder to pull themselves out of the mess if they can't leave an area. So, I agree with you and ProfK.