Our main concern, though, was budgeting, and the saving habits of Americans. Over his 45-year career, DeLisio told me he’d seen a marked change in the way people approach large expenditures. Not too long ago, it was common to hear people speak of “saving up” for something. Months or years would pass before the purchase of a new car, refrigerator or dining room set. But easy access to credit and a gradual withering of the debt taboo have resulted in an explosion in consumer debt over the past few decades, and these days, fewer people put money away in a rainy day fund. DeLisio and I discussed whether schools ought to focus more on this issue. The consequences of being bad with money are more dire and long-lasting than deficiencies in other subjects. Should students have to take an entire class on budgeting? Would telling a teenager that every dollar put away in his or her 20s be worth three dollars put away 10 years later, thanks to the magic of compound interest? What about some in-depth lessons on borrowing money with examples? Would these lessons stick in the back of that student’s mind five years later, when the choice comes up to buy a shiny new car they probably don’t need? Perhaps general lessons in thrift are in order, taking into account food prep, car maintenance, home maintenance, and extrapolating small purchases like buying bottled water and a $3 cup of coffee over the course of a year.
I do recall covering some of this stuff in a Home and Careers class in eighth grade, but I think something more comprehensive might be in order. The shift in our values DeLisio spoke of goes hand-in-hand with the period of unprecedented prosperity this country experienced after World War II. For generations, parents could expect their kids would have a good chance of living a better life than they did, of having more opportunities. But although that prosperity has peaked, the expectation of improving circumstances hasn’t. To keep the party going, you need to borrow money. This has fueled a suspension of disbelief when it comes to realistic chances of repayment. Credit card debt is an obvious example. Except in emergency cases, you have to be willfully ignorant of how credit card interest works to carry a balance for unnecessary purchases like clothes and vacations. The subprime mortgages of a few years ago were another. Some borrowers were taken advantage of, but others, out of a conviction that they deserved a nice home of their own, chose to ignore doubts about repayment and rushed to close the deal. Most recently, the explosion of overpriced for-profit universities, whose students hope to ride out the recession and emerge with a ticket to a good-paying job. (Similar motivations have pushed distressed unemployed or underemployed 20- and 30-somethings back to traditional universities, too, but the amount of debt and rate of default for those students is less.) Rather than view graduate school as an investment, and look at actual wages and employment prospects, a willful suspension of disbelief prevails here, too.
Budgeting and financial know-how aren’t generally taught in schools because it’s assumed rational adults will be guided by their own self-interest, with maybe a few lessons on balancing a checkbook from dad before they leave the nest. But when our government urges never-ending growth of the consumer economy, and predatory lenders stack the deck against borrowers, and mom and dad want their kids to do things they never did (and damn the expense!), perhaps it’s time for another approach.
At the very least, that nagging voice that protests at the prospect of an unnecessary purchase will have some more articulate arguments to throw up against the instant gratification monster.