18 December 2018
Shannon Nutter-Wiersbitzky
Principal in Vanguard Planning and Development
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Retirement Readiness Begins in Kindergarten
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Recently I found myself in a very rare position, home at 10:00 am on a weekday, sick with the flu. Unable to muster the energy to do much else, I was stretched across the couch with the television on. In between the morning talk and game shows, I noticed something. More than half of the commercials were advertising some kind of financial instrument. There were ads for credit cards, payday loans, and reverse mortgages. While I wish everyone could see through the promise of quick money without consequence, I’m all too aware that this isn’t the case.

It may not surprise you that the average American does not have a great handle on their finances. Among families with debt, credit card balances top $15,000 ¹. According to the 2014 Consumer Financial Literacy Survey,41% of Americans rate themselves a C, D, or F when it comes to financial education. In his book Outliers, Malcom Gladwell repeatedly mentions the“10,000 hour rule.” This is the notion that it takes at least 10,000 hours of concerted and deliberate practice to gain mastery over any given field. We typically think about it in relation to athletes. Unfortunately, for most of us, financial education isn’t something we master early. Money is a taboo topic for many families. So we often don’t learn about it at home. In most cases, we don’t learn about it in school either. Or the learning is limited to a single class in a single grade, often not until high school. Dealing with money in a responsible way isn’t something we practice over and over. If anything, by the time we’re adults, with real jobs and real bills, we have 10,000 hours of firmly solidified bad habits. When we begin earning our first income as teenagers and young adults, most of us venture into the world having never been taught much about money. We don’t know how to budget, we’re not good at saving more than we spend, and we don’t understand the benefits of delaying gratification. Hence those average credit card balances.

One approach to building better savers and spenders is through community outreach. How different would the world be if financial wellness began in kindergarten? What if those 10,000 hours of concerted and deliberate practice started earlier? What if you started in elementary school and continued refining these skills through Grade 12? How many participants could make better financial choices? How many of you could be saved from those advertisements for easy credit and payday loans? 

Well, for more than 250,000 students across the United States, that reality is beginning to take shape with My Classroom Economy (MCE). A free classroom program offered by Vanguard, MCE enables teachers to create a mini-economy inside the classroom. Students learn through experience,not lectures. They apply for jobs, earn salaries, pay rent for their desks, and maintain a budget to account for their wants and needs. It’s about building the core habits necessary for future financial success and learning them in an environment that is safe, where mistakes don’t have long-term consequences with 16% interest rates. Instead of trying to change (often bad) behavior later on, MCE trains kids right from the start.

Maybe elementary school shouldn’t be just for reading,writing, and arithmetic. Maybe the time is right to also make it about dollars and sense. Hiers, Mary. “What is the average American credit card balance?”

Blog by: Shannon Nutter-Wiersbitzky, Principal in Vanguard Planning and Development.

© 2015 The Vanguard Group, Inc. All rights reserved. Used with permission. 

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