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Well, there's obviously an importance of thinking about financial literacy as a
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life skill, something that we need to have to build on our culture. Michael Roberts is a finance professor here at
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the Wharton School and joins us to talk about that side of the story. Hi Michael, great to talk to you again. Uh,
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good to be here, Dan. And I don't think it can be overstated in any way, shape
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or form, how important financial literacy can be in the scope of what we're talking about with with life
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skills. Yeah, I couldn't agree more. Many of societal ills are directly or indirectly
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linked to financial literacy. What is it that has gone wrong to a degree, maybe? Cuz it feels like maybe
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we've dropped the ball a little bit in terms of developing those skills, especially on our on our kids as they're
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growing up. It's a It's a great question and one without a simple answer. I think there's
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many factors that weigh in to the financial challenges and struggles people face beginning very
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early. Just getting kids acclimatized or used to engaging with finance and financial
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decisions. Um, getting them comfortable, you know, speaking to someone who understands finance, going to a
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bank, these sorts of things. Then in, you know, high school, middle school, high school, the the education um, I
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believe is lacking despite a lot of efforts and a lot of good faith efforts. And there's this inertia, Dan, that
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moves with people throughout their lives that if they don't get started on the
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right foot, it can be very difficult to recover. Um, so so the process needs to start
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early and it needs to be done correctly. Is it fair or unfair to say that some of
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this lies in the laps of parents as well? Yeah, I think there's blame to spread all the way around and and I
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speak as a parent myself. You know, I'm very conscious, perhaps because of my position,
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of my child my own children's comfort and knowledge of finance even though they're they're relatively young. So my
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goal has been to get them comfortable not just talking about it, but engaging with it. Right? Understanding what it
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means to have, if not a checking account, you know, a credit card with a limit or how to go
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into a bank, how to check your your balance, how to budget. You know, really sort of ingraining these things, simple
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things early, so it becomes part of the of who they are in some sense. It becomes automatic later in life. Let me
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throw one in from my own personal experience. My oldest daughter has her first job this year. She's working at a
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restaurant here in the Philadelphia area part-time. And so it was the first time
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she's gotten a W-2. And you know, that experience and I helped her do the taxes
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this year, but my goal is next year for her to be the one who will sit down and go through the tax form in terms of
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filing it. And you know, that's that's obviously a step up the ladder, but it's
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one of the pieces that I think we need to do and consider more as we move along here. I couldn't agree more, Dan. And
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look, if if you were to ask me, what are the two biggest barriers to getting comfortable with finance?
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One is just the language. It's just almost impenetrable. All the acronyms. It can be very daunting. And number two
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is familiarity or comfort. It's really scary or can be doing something for the
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first time. And and that that applies to me as well. So getting kids doing stuff,
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right? Setting up a budget, doing their taxes, going to the bank early and frequently,
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even on a small scale, is incredibly powerful for them for the rest of their lives because then they no longer fear
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it, right? When did this first come onto your radar as being an important component? And was
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some of this even your experience growing up as a teenager and having that first job and that first bank account?
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Yeah, I mean I mean this started resonating with me as a child when, you know, my my grandmother gave me I think
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they were Series Triple E Savings Bonds. Yes. And maybe some of your listeners will remember what those are, but but
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you know, I saw these bonds in $50 increments and I thought I was just set for life. Right? So my my attempt to
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cash those in at the bank the next day failed miserably for a variety of reasons. But But you know, ever since
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then, you know, my life growing up, frankly, was littered with a lot of financial mistakes and challenges
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because I didn't understand things and I was partly afraid to engage with them.
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And it's really only been through my teaching and my research that I realized, well, wait a second. This
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isn't difficult. It's not scary. If we can deliver it properly to people,
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right? High school students or or younger, boy, we can have a massive impact. And the emphasis is on deliver
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it properly. And I think it's interesting because, you know, when you think about grade school education,
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there there are components of financial literacy that are included in there. Being able to, you know, count coins and
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the value of coins and stuff. But it seems like maybe it stops somewhere along the line, fifth grade, sixth
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grade, somewhere in that realm. And and some school districts have it and some states mandate it, but it's
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not, you know, across the United States, which I guess is is a little surprising
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to me. Yeah, I think there's a lot of really good intentioned people out there.
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But the sort of heterogeneity or diversity in topics or subject matter and delivery leads to
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an inadequate life skill when it comes to finance. So sometimes finance is buried in a math
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class or a home economics class. Sometimes they only talk about taxes. They don't talk about savings or
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investments. And so there really needs to be a broader, more unified approach and consistent delivery throughout
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children's formative years to set them on that right path as young adults and
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beyond. How do you think we approach it now because it's showing to be more and
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more important. And obviously something like the student loan debt crisis has really amplified this over the last
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decade or so. But how do we better do that? Because part of that is also going to be having
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enough educators in place to be able to deliver this this component of education
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moving forward. Yeah, so I I I Now you're striking at a chord that's very close to to my heart and what I've
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been working on lately is I I think we need to train the train the teachers, so to speak. A lot of teachers, whether
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it's a math teacher or a home economics teacher, whomever's teaching this
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finance at their school, very relatively few have actually been trained in finance. And that's not their
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fault. It's just sort of fallen on their lap based on what they tell me. Hey, I
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have to teach this. It's part of some requirement, state requirement. Um, so what what I think needs to happen is
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that finance educators need to teach these non-finance educators to be finance educators, to deliver it to their
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students in a way that's going to resonate and stick. And the beauty of this, Dan, is by training the teachers,
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there's huge benefits for the teachers themselves because many of them struggle
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with these challenges as well. Yeah. So it's really a win-win. You help the teacher, you help the student, and by
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extension, you help the family and community. And then I mean, not that we are enjoying the financial issues that
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we're in right now, but all that is kind of gone on, you know, with inflation and
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the impact because of the pandemic, these are kind of case studies of the impact of of
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finance and what it goes through. And really at a base level for in many cases. It is. And Dan, you know, a lot
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of people out there, including myself, to some extent are thinking, okay, it's
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getting really expensive to live. What do I do? Right? I mean, when I talk about teaching finance, it's not telling
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you what a stock is or what a bond is. It's helping you make decisions about
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what where you should save your money, what the risks are, what the what is inflate How can I deal with inflation
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now in my life? How do I alter my budget, my savings? This is the way finance needs to be
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taught, how to make better decisions. Do you feel like there's there's a path
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that we can develop here and I would think it's probably going to be over the
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next several years, but to be able to to get to that point. And it's going to be a multi
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I think faceted approach here because you're talking about the education piece. You're talking about the public.
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You're probably talking about legislators being involved in this as well. So there's a lot of hands that
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could be involved, you know, in this process. There are. But But the I think the
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beauty is that a lot of the a lot of the material and delivery work has already been done. It's what we do at Wharton.
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Right? When when when me and my colleagues teach finance, we teach people how to make these decisions for
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themselves. And so as you pointed out, Dan, the real challenge is just getting it out there. Working with
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educational systems, superintendent superintendents, educators, and eventually legislators to get this type
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of material and delivery system into the hands of teachers and kids. That's the
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real challenge at this point. And we're already starting We are We already have
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some inroads. We're already starting to work with with some school districts. So
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slowly but surely. How are you seeing that then on the ground level with the work that that
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you're doing it with some of the schools in the in the Philadelphia area? So, I haven't personally engaged with
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schools in the Philadelphia area. I've I've worked with I'm working with some
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other districts and I got to tell you there's a real appetite and a hunger because everybody from the
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administrators to the teachers to the students understand how important this knowledge is. They all want it. And so,
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you know, we're here to we're here to give it to them. We just need to work
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within the system as you pointed out. Can you then can you guesstimate the the downstream
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benefit of having that education piece in terms of impact on life, impact on education,
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you know, potential earnings benefits? You know, are are there is there a path that you you can see there? Yeah, so so
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instead of boring you with lots of statistics, let me give you an anecdote, a personal anecdote that's illustrative.
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Um I racked up a whole bunch of credit card debt in college. And so, after I graduated during my
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first job, what I realized is that the only way I was going to pay down that debt is I had to liquidate my 401k at
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the time and just get rid of it. Yeah. So, what I did last year and and I probably shouldn't have done it is I
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computed, "Hey, had I not made that mistake, had I just left my 401k, not added any money to it, just left it
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alone for the last 25 years, hey, how much money would I have today?" I actually lost out on over a quarter
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million dollars from that just small start. Yeah. I mean, that's a lot of money. And now, granted it's anecdotal,
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but you can see that small mistakes early on have big implications later in life and that's what we want to avoid.
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Michael, always great to talk with you. Thanks for a few moments today. Thanks, Dan. Take care. You got it. Michael
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Roberts, who is a finance professor here at the Wharton School.