A Financial Education Pays More than A College Degree

This post came about as the result of a group writing project about Education and Wealth at GoBankingRates.com.  JMoney from BudgetsareSexy turned me on to this project, and it also includes contributions from Hank at Military Money Might and Ryan at The Military Wallet.  I encourage you to check out all the participant’s articles and vote for your favorites.

Education is an interesting…for most people, the word conjures up visions of ivy covered buildings with professors in tweed jackets.  However, nearly all  education happens outside of the university setting:  a mom teaching their child to ride a bike, a boss training a new employee in their software, a friend sharing their secret recipe for that fabulous dip.  Learning new stuff is a part of everyday life and without it, we’d be mindless blobs sitting in the corner.  When it comes to building wealth, a financial education is more important than a college education.  Even the highest income has little worth without knowledge about money, how it works, and what to do with it (and what not to do with it).

While lifelong learning is a natural part of the world, learning about money is definitely not part of society’s habits.  You can find all sorts of statistics about the abysmal financial knowledge of kids, teenagers and adults.  Sometimes it is hard stuff, especially if your brain isn’t wired for cash.  Even if financial literacy comes easy to you, it can still be complicated.  I love everything about money – thinking about it, planning for it, and doing calculations about it.  Even so, I have still spent hours struggling over a challenging part of my taxes, or been shockingly frustrated when I haven’t saved the right receipts.

This is where the learning part comes into your finances:  you have to keep at it and put forth some effort.  It is nearly impossible to have good control over your money if you don’t understand it and think about it.  Lucky children have parents who teach them financial skills:  how to comparison shop, not to use credit, that savings is important.  A rare few school systems have good personal financial education segments in their curriculums.  For most of the population, unfortunately, a lot of that learning is going to happen through trial and error, making mistakes and learning along the way.  The education factor is key:  a little bit of learning can prevent a many mistakes, help figure out what happened when things go wrong (and they will), and develop a mindset of financial thoughtfulness that is essential to building wealth and economic stability.

So, how do you learn about money?  I started by looking at my own financial situation:  a basic balance sheet helped me figure out my debts and income.  Paying attention to my own money led me to start reading about money, which has continued to be a source of new thoughts.  I listen to money people on talk radio in my car, and I have attended a few financial seminars.  (Be careful, these people are often selling something!)  If I see Suzi Orman on TV, I stop and watch.  In general, I make financial education a priority.

According to the US Census bureau, the average US lifetime income for a high school graduate is $1.2 million dollars, and an average college graduate is anticipated to make $2.1 million dollars over a lifetime.  The difference between those two figures is $900,000 – no small sum!  However, without financial knowledge, that $900,000 can mean nothing in terms of your overall wealth and everyday living.  Without financial skills to take care of your money, that huge extra pile of cash can easily slip out of your pocket.  Don’t believe me?  How many people do you know that live well on small incomes?  Probably plenty.  How many people do you know who make loads of money but are in debt up to their eyeballs?  Probably a few, even if they don’t let on their situation.

Fortunately for all of us, financial education is cheap (and can be free, especially if you use the library) and easy to find.  There are no set class times, no syllabus to follow and no tests!  You can do it while living your regular life, regardless of whether you are in college, in the military, or in the civilian job market. Devoting just a small amount of time each week or month to keeping track of your money, learning more about how money works, and making a game plan for your finances will pay more than any degrees or certificates.

I want to add here that I am in no way saying that higher education isn’t valuable, or that you should skip going to college and read personal finance books all day long.  As stated in the post, the average earnings of a college educated individual are markedly higher than a person who has completed high school.  That extra money teamed with a solid financial foundation can work together to do great things.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • phi

    I like how you stated that without financial understanding, the difference between what a college and high school graduate makes will not really lead to a great difference in lifestyles.

    Financial literacy is really one of the most important skills you can teach your children. I’m still wondering why finance isn’t a basic part of the curriculum in school.

  • I definitely agree that we’re dropping hundreds of thousands of people into the real world without any understanding of personal financial management. It baffles me to think that personal financial responsibility and wealth building is not required high school (or earlier) curriculum.

  • Marine Wife

    Trial and error is a horrible way to learn about personal finances but it’s so often the way people learn. Teaching our kids to be financially savvy should be right up there with teaching them to take care of themselves by eating right and staying active.

  • Absolutely true! I’ve personally worked with lawyers, doctors, teacher, college professors and other individuals with higher education but they didn’t know how to handle their money.

    They don’t really teach us how to handle our money and that’s because most businesses and individuals don’t know how. We live in a spend now, get it now society.

    So we have been passing this bad habit down to our children and we have been bring these bad habits to the companies we run.

  • airforcewife

    I’ve got to go ahead and give an amen to you for pointing this out. I complain about the lack of financial readiness instruction in school ALL THE TIME. Let’s face it, reading about interest rates is boring to most 18 – 20 year olds, but that’s when a lot of people finance their first car.

    How much are they really paying? They don’t know and don’t care. And that carries over into other aspects of life.

    And that doesn’t even get started on the IRS and their cut.