Special Edition: Financial Education - What You're Not Taught in Schools

The more i read about it in Rich Dad Poor Dad, the more pissed i am. Why? Why am i not encouraged to read about finance and financial management in school? Why chemistry, maths, history and all those crap and not financial management?

We desparately need financial knowledge in life. Look at how people are spending their money now. While it is true that most families are rather well-off with smart and hard-working parents who rake in dual incomes, most are struggling to pay off their bills, bills that mount with every raise. Look at the man on the street, he rushes off to work at 7am, returns at 6 or 7 pm, looking all shacked out and irritated, cursing the darn traffic. He complains about his boss, the size of his pay cheque, the lack of stimulation at his work. Yet, he wakes up at 6am the next day, and drag himself off to work at 7am once again. Why? He needs that pay cheque to fend off the bills, that's why.

Look at the dentist who treats your teeth. He smiles at you and welcomes you to his clinic, which he spends a good 10 hours or so per day treating customers like you. He likes his job and does it well. He works hard and earn huge bucks. He works so hard, he goes home all beaten and rarely has the energy to help his children with schoolwork or read bedtime stories to them. He missed the graduation ceremonies, the football matches, the plays. He has fell into the time versus money trap - the dentist has lots of money, but he has no time. His children grew up knowing the maid as their Dad and Mom, should Mommy be working as well. Dad and Mom then lament that schools are not doing our kids' education any justice. School education should be more holistic, teaching them how to be a good citizen, keep them away from bad companies and teach them that Mary is not Mommy! Parents blame schools, schools lecture parents. It's a never ending cycle. To put it simply, financial management is the resolution.

There are so many other live examples of time vs money trapped individuals. The hawker that sells you hokkien prawn noodles - no time and no money; the vagabond on the street - has time but no money; and of course the dentist - has money but no time. If only they were taught financial management earlier on, they, and anyone else, can be forced into early retirement.

School is there to fill in the time gaps that parents spend at work, away from teaching their children. School is there for interactions and making friends. School is there for teachers to make their bucks. Of course, school is there for kids to learn. Learn what? Maths, Chinese, English, History, Sciences. Sounds cool. But no one teaches us financial manangement, one of the most important knowledge of life!

You see, we can be the Mathethematic Genius in class; be the Physics Olympiad Gold Medal winner; the triple S-Paper Champion of the cohort. But when it comes to financial independence, we know next to nuts! Some know a thing or two about money, but who really has a mentor in such matters? Our parents? They are just as ignorant, if not worse students in wealth management than us. Why? They are products of the same curriculum taught to us, generations after generations!

I just organised a family meeting last night to write up an income/expenditure worksheet[termed financial statement by learned accountants], pointing to a stunning S$1641 deficit per month! And not one of my folks had a clue as to how to alleviate this dire situation. I was, prior to last night, witnessing a rapid reduction in my parents' retirment savings. They don't even know where is their financial standing until the uncomfortable truth spilled out all over the worksheet yesterday. And why isn't it a surprise that we are spending beyond our earnings? We are not a family that goes for ostentatious living, nor do we laze around and earn peanuts. We are an average middle class family, living frugally and observing the filial piety laws in Singapore - we support our grandparents with whatever we can. Now, how in the blue hell did we run up against a $1641 deficit per month?

It's scary how little things - simple daily household expenses can add up to. Mortgage is a killer, not to mention medical bills for my mom's treatment. The first and the last issues are undeniable facts of life. We have dinners at home, people get sick. These are really part and parcel of life. But mortgage? Why do we need mortgage and loans? Because 4th Aunt and 2nd Uncle said that a married couple without a roof above their head to call their own; and a car to zoom around in will be lacking the proper status accorded to them by marriage. And what do they know about the long term financial impact of such liabilities? Nil.

A home bought with mortgage is not your own. It belongs the lending party, be it the bank or the government. The same goes with the Lexus or Toyota bought with car loans. Many will think of these two as their biggest assets, when actually, they remain their biggest liabilities. There is of course a way out of this: Purchase with cash. Imbecile! Cash? Who can fork out so much cash to purchase a house and a car save for the very rich? Ever wonder why they are rich? They purchase within their means and never pay interests, or extra charges. Can't afford a house yet? Rent. Can't own a car yet? Go for a car pool and go public!

But 4th Aunt and 2nd Uncle said... To the hell with their conventional wisdom. Do you want to live with a $1641 monthly deficit like my family, and so many others' as well, while striving hard to maintain a facade of normalcy every day? The first step in life is to be debt free. Now, that's something that my textbooks has never taught me. They taught me alot of maths and chem that i have since forgotten, but they have never told me that cash purchases, and being debt-free, are the way to go in life. It doesn't take a rocket scientist to figure out the sums saved without paying interests on loans, but few would even go down that road. My family will be going down that road on 06 April 05 - the first step to financial freedom: Getting rid of our mortgage.

We need mentorship about money in life. There are tonnes of self-help financial books out there, all screaming for attention with titles like 'Financial management for Dummies' and ' 7 habits of Rich People' etc. They are all telling us the same age old stuff - be debt-free, have liquidity, invest invest invest, work to learn and not to earn. 'Money works for me! I don't work for money!' The smart works hard to earn money; the rich hires the smart to do just that for him.

Self-help financial management books should be a compulsory read in all public and private schools. Forget about hiring teachers to teach us financial freedom; if they earn by teaching, they can't teach well can they? Invite successful individuals to share their experiences during seminars and hold discussions. Demonstrate financial accounting and let the audience get their hands dirty by going through the process themselves.

But knowing is different from acting. Determination to change is a skill that cannot be taught. Realize that the urgency to be financially savvy is here everyday. Let your need to be finanacially independent drive you to learn what you're not taught in school today!