By M.D. Kittle | Wisconsin Reporter
MADISON — Wisconsin has some pretty smart kids. Smarter than many of their adult fellow citizens.
After a woeful generation or so of plummeting U.S. financial literacy rates, it’s nice to know that more and more students in Wisconsin are learning the basics of personal finance.
According to a comprehensive survey by the state Department of Financial Institutions, 44 percent of Wisconsin school districts require a course in personal financial literacy as a prerequisite to high school graduation. And, the survey says, 27 percent of the districts that do not offer such required courses plan to do so in the near future.
“The need to be financially literate has never been more important,” Gov. Scott Walker said this week in a statement. “While more than 40 percent of our school districts are requiring their students to take a PFL course in order to graduate, there is more we can do to teach all Wisconsin young people this important life skill. I encourage educators across the state to do their part to continue to integrate personal financial literacy instruction into our schools.”
I couldn’t agree more.
But the growing number of personal finance courses got me thinking: There’s another segment of the population that is in dire need of financial education, a group that, based on everything I have witnessed during the past several years, appears to be struck imbecilic by financial illiteracy.
I refer, of course, to Congress.
CRASH COURSE: Perhaps the people spending your money should have to take a financial literacy course.
Not merely Congress. You can add the president, most federal bureaucrats, a lot of state lawmakers, plenty of county board representatives, scores upon scores of city managers and countless other public officials to the list of the financially illiterate.
But the House of Representatives and the U.S. Senate pull the purse strings on the most bloated government budget the world has ever known, so these are the people doing the most financial damage.
Look no further than a federal debt on the precipice of $17 trillion. As I type this sentence, the dizzying debt clock is spinning quickly past $16.952 trillion, to be precise.
You don’t drive the most powerful economy in history this far down in debt without really being bad at finance in particular and math in general.
Any remedial math course will tell you that saddling every taxpayer with $148,000 in unpaid bills adds up to fiscal disaster.
And you don’t have to be a percentage whiz to know that nearly $2.19 trillion in interest on the exploding debt is 100 percent insane.
Speaking of crazy, the definition of insanity, as the old cliché goes, is doing the same thing over and over again and expecting difficult results. Tired aphorism aside, the definition abides with Obamacare. A$1.375 trillion bill over the next decade for near-nationalized health care seems to be the same old insanity of Big Government spending that got us in this $17-trillion mess in the first place.
Financial illiteracy, downright idiocy, appears to be at work in the states’ public sector pension train wreck, with unfunded liabilities topping $4 trillion, according to one recent study.
Illinois, for example, spent more than one-fifth of the state’s general revenue fund to pay for the $100 billion-plus in public pension costs and public pension debt. That takes a whole lot of financial stupid.
Financial literacy experts caution teens against getting credit cards without strict checks on spending and repayment. The same advice should hold for Congress.
In fact, the people who spend taxpayer money should have to take and pass the same kind of financial literacy courses now demanded in Wisconsin schools.
Here are a few sample questions from the City of University of New York financial literacy quiz for students. The test is geared toward personal finance, but I think the same basic principles should apply to tax and spenders in Washington, Madison or wherever government budgets may roam.
Being on a budget means:
a) You pay bills every month at the due date
b) You made a plan of your expenses to be less than or equal to your income
c) You are earning enough money to be able to live well
d) Your bills are generally paid by every due date
An example of a need is:
a) A Florida vacation
b) A car
c) Room and board
d) A laptop
It’s OK to skip payments on your bills some months, as long as you pay the next month:
I bought my first car and got a loan to pay for it. If I default on my loan, only this lender will know about it and if I need another loan, I’ll be able to get it from another lender:
Your credit score is important because:
a) It can affect your interest rate if you finance a car or home
b) It can have an impact on whether you can finance major purchases
c) It can determine whether you get credit cards
d) All of the above
If lawmakers, government executives and bureaucrats can pass these kinds of questions, then they get to spend our money. Until then, it’s back to school.
Contact M.D. Kittle at [email protected]