Knowledge That’s Worth Having

I’m sitting in grade six math class, doing the workbook exercises I hate. I’m asked to solve this problem:

Two trains are 396 miles apart and are heading toward each other. One travels at 95 miles per hour while the other travels at 85 miles per hour. How long will it take for the two trains to meet?

My first thought: Who cares? It’s not as if I’m going to grow up to become a railroad logistics expert.

And then another problem:

Kathy’s mother is ordering lobster salad for a party. If she expects 16 guests at the party, and each guest will eat 1 cup of lobster salad, and there are 4 cups of lobster salad in a pound, how many pounds of lobster salad must she order?

You lost me at “lobster salad.” Read the room, people! I’m sitting in a classroom in a rundown school building in the middle of western Pennsylvania coal country. None of my classmates has ever tasted lobster salad, let alone had their mother order it for a party. Parties around here mean someone throws some hot dogs on the grill. If they’re feeling especially fancy-schmancy, they might put out some chips and dip. But lobster salad? Not happening here.

Perhaps asking students solve the following problems would be more relevant:

» Jeff’s part-time job pays him $12.50 an hour. He has his eye on a used car that costs $15,000. Gas is $4 a gallon, and car insurance costs $4,300 a year. How many hours must Jeff work in order to afford a car?

» Kim is applying to college. She has been accepted at an in-state public university that costs $20,000 a year. But she also has been accepted at a private college that costs $40,000 a year. She qualifies for need-based financial aid at the private college but not at the public university. And let’s mention that the private college is 800 miles from her home, so she needs to factor the cost of traveling home on breaks into her college decision. Which school should she choose?

» Maria and her best friend plan to get jobs and move into an apartment together after graduation. If the average wage in their town is $18 per hour and the average rent in their town is $1,000 a month, can they afford to do this if they both work 40 hours a week?

If you think these problems are less like algebra and more like financial literacy lessons, you are right. Each day, Americans are faced with problems such as how much to save for retirement when they have mortgages to pay and kids who are outgrowing their shoes. Problems such as how to pay off six figures of student loans while paying rent on an entry-level salary. Problems such as deciding which is the most affordable car to buy or which is the best type of insurance to choose.

The lucky among us received a financial education at home or at school. But most of us had to learn these lessons the hard way.

April is Financial Literacy Month, and it’s a good time to assess the state of financial literacy in the U.S. The National Foundation for Credit Counseling conducts a financial literacy survey each year, and the results of their most recent survey in 2020 show some interesting results.

» More than half of adults (57%) continue to give themselves a grade of A or B on their knowledge of personal finance, and nearly nine in 10 (87%) say they were very or somewhat confident that they made the right choice during their last big financial decision (such as picking a credit card, buying a car or refinancing their mortgage).

» At the same time, however, more than one in 10 (13%) admit they are not very or not at all confident, and that percentage has been rising slightly each year since 2017 (12% in 2019, 10% in 2018 and 8% in 2017).

» Adults ages 65+ are more likely than younger adults to feel confident in their last big financial decision (95%, ages 65+ vs. 89%, ages 55-64; 87%, ages 45-54; 83%, ages 35-44; and 84%, ages 18-34). Over three in four (78%) agree — including nearly three in 10 (29%) who strongly agree — that they could still benefit from advice and answers to everyday financial questions from a professional. When asked who they would turn to for general financial/money/management guidance, the top response remains a financial professional such as a CPA or financial planner (36%), followed closely by friends and family (31%).

Our April feature is focused on financial literacy, and we learned how many professionals in the industry are passionate about sharing their expertise to help others improve their own financial situations. We share the stories of some of them this month.

One of the people we interviewed said he wished math class would focus less on solving problems such as those racing trains and focus more on helping students solve problems that will impact their lives as consumers and citizens. We couldn’t agree more.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].