The One Reason Why Most Americans End up in Debt (And Nobody Talks About)!

Regardless of whether or not we believe the banking industry is out to get us, average people are repeatedly the victims of financial missteps. This can include anything from $700 billion bailouts to outrageous ATM fees. But whether it’s an evil plan or simply an overly complicated infrastructure, the understanding of the complexities of money among Americans is low. Money makes the world go around, but beyond counting the amounts, most Americans have little understanding as to how money works.

The average person’s knowledge of finance typically comes from a hard lesson learned. At the end of life, many lessons have been gained, but along the way we get exploited and abused. This makes the idea of high school finance classes practical and appealing. Currently, ‘home economics’ is more about cooking than about money. Cooking is important, but so is the ability to buy the groceries and because of this, as a society, we need to have a better approach to money literacy.

Without quality education about money, entire industries, like predatory lending, emerge and we all suffer. Even well-established banks abuse consumers while rigging the economy. But we take it because we rarely understand how the banks and the economy work.

The United States ranks below 13 OECD countries in financial literacy at a mean score of 492 for testing where the average is 500. In China, students scored an amazing 603. A full 18% of American students can’t perform basic financial literacy tasks. Just 9.4% of students in the U.S. are at the top in financial literacy, which means they can balance a checkbook and understand the implications of tax brackets.

Only 40% of American adults keep a budget. A scary 76% live paycheck to paycheck, one misfortune from financial ruin. A mere 5% of adults say they were taught financial literacy from a teacher.

The implications of this lack of financial knowledge are simple. Massive consumer debt is a result, as is a lack of retirement planning and understanding of how financial mismanagement can keep one from climbing the socioeconomic ladder. Hiding financial knowledge for the benefit of the few continues to create a consolidation of power in America.

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It might be said that lack of financial education contributes to neo-feudalism.

A semester of intensive financial education among high school students is a start to creating the financial knowledge so many Americans lack. It might not be the cure-all for ongoing financial stratification as Wall Street devises more massively complex instruments using predictive analytics that requires a Ph.D. in physics to piece together, but it is a start.

This lack of knowledge doesn’t merely subjugate people to banking shenanigans, either. It is a barrier to starting a business or running one effectively. People in business need to know some financial basics, like the basics of financial statements, balance sheets, cash flow and income statements. When these things are not well understood, perfectly good business ideas typically fail.

The knowledge (or lack) of finance is something that is contributing to creating further economic disparity in the United States. The requirement of all high school students learning personal finance will help level the playing field and give them the tools to start working their way up the economic ladder while they are young. It is a win for everyone except the banks that charge fees and Wall Street’s ongoing Ponzi scheme.

Call your school board today and ask why they aren’t mandating something this important in the schools.

Jerry MooneyJerry Mooney is the author of History Yoghurt and the Moon as well as The Power of Thought. He studied at the University of Munich and Lewis and Clark College where he received his BA in International Affairs and West European Studies. He received a UNESCO travel scholarship to East Germany where his thesis on economic transformation received honors. He has recently taught Language and Communications at a small, private college and owned various businesses, including an investment company that made him a millionaire before the age of 40. He writes prolifically about various subjects including money, tech, education, disruption theory and innovation. He can be found on Twitter@JerryMooney