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Financial education should be a prerequisite to qualify for any type of public aid.

As a professor at a community college in one of the poorest neighborhoods in Chicago, I have observed poor money management skills and misplaced priorities of low income adults. A vast majority of my students are very young single mothers and, as a result, have high childcare expenses along with low income. One student could not afford treatment to have a painful oral abscess treated until payday one week later since she had insufficient savings. She already had an unpaid dental bill from a prior root canal that she misunderstood what the cost would be. Still, she and many other students have tattoos, get their hair and nails professionally done, and have tablets and smartphones. Many of my students regularly eat at fast food restaurants and bring junk food to class for a snack. I have observed my students spending money on luxuries when they are not able to meet their basic expenses.

Although a majority of my students are getting free education and other forms of public aid, I don’t think that it is enough. As financial education was the turning point for me to get my finances on track, I think it should be a prerequisite in order to qualify for any type of public aid from the government. Additionally, I think that ongoing financial follow ups should be required periodically in order to continue to receive public aid.

The class should teach how to track expenses and form a budget. It should have a calculator for people to plug in their information and find out their complete financial picture including income, expenses, and net worth. The class should emphasize the importance of an emergency fund and could suggest spending cuts and help the person come up with a savings plan. Every month, people receiving aid should be required to log on to enter and track their savings and net worth. These tools could educate and motivate lower income individuals to make significant improvements in their financial situation as they have for me.

  • May 26 2013: I agree with your idea that the government aid should encourage/require some knowledge or practice of financial management for the recipients. However, it really does not need to require a course in a community college to "certify" the requirement. The "course" should be given by most elementary schools to establish such short class. The course could be taught in one or two days on one weekend. The reason for such arrangement is purely for the benefit recipients convenience, and the teachers of such courses could be invited by the authority to be recruited from volunteers or other professional institutions. After "graduation", the qualified "students" should be given a specially made calculator (which is used during the training class) capable of making all the procedures of budgeting and expense tracking. The education program and the calculator should be financed by either the Federal or the State government.
  • May 4 2013: Agenda check Government corruption first money issues next.
  • Apr 29 2013: there is an old saying that "cut one's coat according to one's cloth". I believe it is basically a matter of culture than education ,as these are pretty much common sense and do not require any formal education. For instance in India people do not spend more than what they have, hardly 10% people have credit cards. In US I have seen people spending first and then thinking how they will fund it. This is not to say that one culture is better than another, but to show how community values affect the spending behavior of people.
    If people learn to spend only what they have (and not what they might have in future), they can mitigate most of the potential financial problems. IMHO.
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    Apr 29 2013: Using government resources to accomplish a goal that could be otherwise addressed is inexcusable. Perhaps you might know a professor that is willing to provide his/her students with such a financial education. I imagine your students reacting well to an instructor who can relate to their predicament.
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    Apr 29 2013: Culture is the most remedial teacher.

    What does the Chicago culture teach?
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    Apr 28 2013: It is wonderful that you were able to leverage these tools to turn your life around. Is financial education part of Adult Basic Education at your college or provided free among student services?

    One issue worthy of consideration is how much of consumption of items that you label luxuries arises from a lack of understanding that it might be better to save money for regular expenses and a rainy day fund, and how much is a decision that reflects a time preference in consumption that greatly favors the present or consumption preferences that favor these pleasures? Analogously, many people who eat poorly are well aware of what healthful eating looks like but don't make those choices, and many are aware that smoking shortens life and exercise extends life but choose a different path for themselves.