The Real Education Gap: Financial Literacy by Joseph

The Real Education Gap: Financial Literacy by Joseph - June 2025 Scholarship Essay

I used to think my parents were just bad with money. Then I realized they were smart people making predictably irrational decisions.
Growing up, I watched financial stress ripple through our household in ways that seemed inexplicable. My parents worked hard and earned decent incomes, yet bills consistently arrived before paychecks could cover them. Credit card statements piled up on the kitchen counter like accusatory letters. When unexpected expenses hit, the tension in our house became palpable.
At fifteen, I assumed this was simply how money worked for most families. Either you had enough, or you didn't. Either you were good with finances, or you weren't. I was wrong on both counts.
The shift in my thinking began when I started studying economics seriously. Behavioral economists have discovered something fascinating: even highly intelligent people make systematically poor financial decisions when they don't understand the underlying principles. It's not about intelligence or willpower. It's about lacking the mental models to navigate an increasingly complex financial world.
When I began helping my parents review their spending patterns, we uncovered decisions that made perfect sense in isolation but created chaos collectively. They understood that credit cards charged interest, but they didn't grasp how compound interest could transform a small balance into an insurmountable debt. They knew saving was important, but they didn't realize that delaying retirement contributions by even a few years could cost them hundreds of thousands of dollars over time.
The most revealing moment came when we examined their credit utilization. They were carrying balances on multiple cards while keeping one card with a zero balance "for emergencies." This felt responsible to them, but it was actually costing them money and hurting their credit score. When I explained how credit utilization ratios work, my dad paused and said, "Why didn't anyone ever teach us this?"
That question haunts me because the answer is simple: almost no one learns personal finance in school.
We require students to study literature, history, and science. These subjects matter tremendously for developing critical thinking and understanding our world. But we graduate students into an economy that demands financial literacy without ever teaching them the basics. We expect eighteen-year-olds to make informed decisions about student loans, credit cards, and investment accounts when many have never learned the difference between simple and compound interest.
The psychological aspects matter just as much as the mathematical ones. Marketers spend billions studying how to trigger impulse purchases and leverage social pressure to drive spending. Meanwhile, students graduate with no understanding of why they feel compelled to buy things they don't need with money they don't have to impress people they don't particularly like.
A required personal finance and introductory economics course could change this trajectory entirely. Students would learn how compound interest can work for them instead of against them. They'd understand how credit scores function and why building credit history early creates lifelong advantages. They'd recognize the psychological tricks that lead to overspending and develop strategies to counteract them.
Most importantly, they'd learn to think economically about their decisions. Economics isn't just about markets and policies. It's a framework for understanding trade-offs, opportunity costs, and unintended consequences. When students learn to ask "What am I giving up by choosing this?" and "What are the long-term implications of this decision?" they develop judgment that serves them far beyond financial matters.
The resistance to mandatory financial education often centers on concerns about time in an already packed curriculum. But financial literacy isn't separate from other academic goals. It reinforces mathematical concepts, teaches critical analysis, and provides immediate real-world applications for abstract principles.
More fundamentally, education should prepare students for the lives they'll actually live. Every graduate will make financial decisions that shape their future opportunities and stress levels. Many will support families whose financial security depends on choices made with incomplete information.
We can do better than hoping students figure this out through trial and error. We can give them the tools to make informed decisions from the start.