Attacking the lack of financial literacy in Canada and the USA has become the norm these days, and with good reason. In my opinion there is a direct correlation between not knowing how to properly handle money, and the problems caused by excessive debt in the marketplace right now. The vast majority of people agree that something should be done, and the public school system appears to be the best medium for delivery. At least, it appears that way until you factor in the makeup of the average teaching staff.
We Have People For That
I am routinely amazed by the lack of financial literacy within the ranks of teachers. I often talk to my fellow educators and many of them have no clue about how much we pay in union dues, how our pension fund is handled (luckily it is actually handled pretty well, not as good as simple ETF or index fund, but still far better than most mutual funds), or even how to do their own taxes. When I told people I was doing my own taxes last year just because I liked to know exactly where my money is going and why, I drew a lot stumped looks.
It’s Not Our Bag
So why can teachers teach everything from Shakespeare to the Pythagorean theorem and not personal finance? Well, to start with, we have educational backgrounds in many of the subjects we teach. My university’s Faulty of Education did not allow economics courses to count towards a “teachable major and minor.” This means that you couldn’t get into the faculty if you focused on financial areas in school. Furthermore, if you look at any poll of teachers, by far the weakest area overall is math skills. Math teachers generally know something about geography, while humanities teachers generally avoid math like the plague. You don’t have to be NASA employee (re: rocket scientist) to get the basic calculations required in personal finance, but it still helps to be comfortable with numbers.
Aren’t The Answers At The Back Anyway?
This lack of base knowledge could probably be remedied by a couple of hours with a textbook and the infamous “Teacher’s Edition,” but the problem runs deeper than that. Teachers are the epitome of financially spoon-fed public employees. This isn’t necessarily a bad thing or a good thing, but it is relevant to creating an effective financial literacy course. It seems most teachers have realized they are better off having someone else worry about their finances, and that they are willing to give up a ton of personal choice in the name of paying someone else to take care of personal finance for them. It’s not as if teachers don’t pay for their benefits, it’s that they don’t have a choice, so they can’t really make bad ones.
Seen Many Starving Teachers Lately?
To begin with, teachers make a wage that is far above the median in Canada. My wage is public knowledge, and as a second year teacher I make about 53K a year. In Manitoba, teachers with 10 years’ experience generally make around the 80K mark. Anytime you make that much more than the average, life gets a little easier. Going out for supper a couple of extra times a month, or buying a coffee everyday doesn’t have the same proportional effect on someone who is guaranteed a good salary. Teachers also disproportionately end up marrying other professionals, which further augments the idea that personal finance gets easier with more discretionary income. Most teachers also never worry about creating an “emergency fund” because our unions give us such unbelievable job security. I have literally witnessed teachers who work maybe 1-1.5 hours a day, and they don’t even get talked to. As long as they give students great marks, and don’t do anything terribly objectionable, they are fine to cross days off of the calendar and fly under the radar. There are very few jobs that have that job security in the world. How do we in good conscience tell kids to save money because they could lose their jobs some day when the thought rarely crosses most teachers’ minds?
The Drawbacks To Superb Benefits
The other reason that teachers can get away with ignoring their emergency funds is our excellent benefit packages. If you get hurt (mentally or physically) you are often covered for 70-80% of your net wage (probably still more than the median wage for Canadians), plus you have a very large amount of sick days every year (I get 20). Our benefit packages mean we don’t have to worry about comparing life insurance, or understanding whole vs term because it will always be there for us through our mandated union plan. Not only that, but our premiums for extended Blue Cross, life insurance, dental insurance, and long term disability are all fairly low because of the huge number of us under the same plan. This takes away a lot of the decisions that other people have to worry about, but it also makes us experience-poor in terms of material that can be drawn on for teaching a personal finance course.
Why Can’t Everyone Have “Freedom 55” Again?
Finally, our vaunted gold-plated retirement (that I would give up in a heartbeat in order to handle my money myself by the way) means that very few teachers I know plan much for retirement beyond very standard ideas (made easier by their yearly salary). As long as a teacher has their house paid off by retirement, and is not responsible for many dependants, they should be just fine. Our teaching pensions are usually 70% of our best 5 years. This means that most teachers that retire this year would draw 56K a year, and there is a slight inflationary adjustment (even if it doesn’t quite keep up). When you add in our guaranteed CPP and our OAS (even though we make more than the median income – WHEN WE RETIRE! This makes no sense to me at all, but god forbid we touch OAS or retirement benefits of any kind apparently). Most teachers have to be near 65-70K. Who can’t live comfortably on 65K if their house is paid for (which shouldn’t have been all that hard given the yearly salary). All this to say, that most teachers don’t have to worry about the cardinal rule of “saving 10%” because it is automatically taken care of for them. Once again, this presents a dilemma in terms of finding staff members who can credibly speak to the realities of the private sector most of their students will be entering.
“I Don’t Have A Solution, But I Certainly Admire The Problen” -Ashleigh Brilliant
So to recap, there are inherent problems with getting people who basically have 90% of their personal finance decisions made for them trying to teach other people about personal finance. I don’t know what the solution is. I definitely agree that we need to teach financial literacy in schools, but how to best accomplish this when we already have a difficult time finding competent math teachers? Maybe we pay sessional business people who might not have Faculty of Education degrees? I guess the unions would never allow that. I could say the solution is allowing young teachers who have not enjoyed the privileged teacher/personal finance experience yet to teach the classes, but judging from our track record we aren’t exactly experts in the field either.
Readers, I’m interested to hear if anyone else has some solutions to put forth?