BY MOST STANDARDS, the United States has a highly educated populace. However, one glaring
omission is the teaching of personal finance, and it contributes to the lack of financial mobility
and prosperity of any person who fails to learn how to budget, save or balance a bank account.
Without those personal finance basics, even people with
substantial incomes can pile up debt, make poor purchasing
decisions and reach retirement age without sufficient savings
to see them through the rest of their lives. Plus, according to
current mortality rates, a man reaching 65 this year can expect
to live to 84. A woman reaching the same age can expect to live
to 87. The span of years between 65 and mortality is likely to
increase. Twenty years ago, the number of Americans aged 100
years or more was around 35,000. That number has doubled
to 70,000 today.
In 2016, the Council for Economic Education released its
biennial Survey of the States, which found no improvement
in economic education in recent years and slow growth in
personal finance education. The council found only 20 states
out of 50 and the District of Columbia require high school students to take a course in economics, two fewer than in 2014.
In the years the survey measured, there was no change in the
number of states ( 17) that require high school students to take
a personal finance course. A requirement for such courses is
the best indicator of whether a school system will actually
So, how do we begin to overcome these educational deficits? Gary Townsend, founder of GBT Capital Management,
Chevy Chase, Md., with 35 years of banking, regulatory and
investment experience, said those who plan on retiring in some
comfort are best served to start learning about personal finance,
saving and investing as young as possible.
“Learn as much as you can,” he said. “Seek advice. Read.
Take financial planning courses in college. Research. The inter-
net is a powerful learning tool.”
Finance and investment might be foreign concepts to young
people who never have had to balance a checkbook before.
While it may be complex at turns, it is not brain surgery.
“A key indicator of risk involved in a particular stock is its
price/earnings or PE ratio,” Townsend said. “The ratio measures the current share price of a company relative to the
stock’s per-share earnings. It’s a very simple formula, but, without it, making a decision to invest in a particular stock is risky.”
83 ELECTRICALCONTRACTOR | MAR. 17 | WWW.ECMAG.COM