Personal finance education is mandated by law to take place in high schools within 22 different states. Ross Mac, Maconomics Financial Expert, believes that financial education standards in America aren't strong enough, noting "our education system is effectively failing the next generations.: Mac joins Yahoo Finance Live to detail the importance of personal finance and outlines knowledge that high school grads need to have.
Video Transcript
SEANA SMITH: Connecticut Governor Ned Lamont signing legislation requiring financial literacy education for high school seniors. Now, there are currently 22 states with this requirement, according to Next Gen Personal Finance. The number of states mandating this course has more than tripled since 2019.
Here to discuss financial literacy, the importance of it, what we could expect going forward or need going forward, we want to bring in Ross Mac, Maconomics financial expert. Ross it's great to see you. I'm pretty sure that you are very encouraged by this news. But how big of a game changer could this potentially be, given the fact that study after study have pointed to so many red flags that have been creeping up with people who have no idea how to balance their budgets or know the first thing about financial literacy?
ROSS MAC: Once again, thanks so much for having me back. I really think that this is a game changer, because we're trying to actually rectify a few things that's wrong in our society, right? I think it was John D. Rockefeller, who once said, I don't want a nation of thinkers, but I want a nation of workers. And so when you look at today's society, right, effectively not much has changed, right? Our education system is effectively failing the next generation.
If you look at health care, there's a lot of things when it comes to preventative measures. And I think the same needs to actually happen for education, right? I think that when you look at where we are, so many-- so many subjects in school are not necessarily applicable. When's the last time you needed to know anything about an isosceles triangle or Shakespeare, right? And if you have over 60% of Americans living paycheck to paycheck, maybe it makes sense to actually teach our kids about budgeting and how to balance a checkbook, right?
And also, we need to teach them about loans, right? Some of the biggest decisions they're going to have in their life will be, should they go to college or not? And if so, are they going to actually take out student loans? I think over 60% of people that actually graduate with a college degree, guess what, they're going to be taking out student loans. And not only that, they need to understand how interest rates work, right, because now we have over $1 trillion in credit card debt, which is actually the highest ever.
And I think we also need to talk about retirement planning, right? I think over more than half of Americans aren't prepared for. i think these kids need to understand about taxes. I think they also need to understand about their credit scores, right? I think when you get to college, you know, you're not able to drink. But guess what? You can take out thousands and thousands of dollars of credit card debt. And I think these are some of the things that financial literacy, by mandating it across the country, will actually be beneficial for the children to come.
DIANE KING HALL: Ross, I want to ask you for-- so obviously, not every state is on board yet with this. Hopefully, one day they will be. But let's say there's a 17-year-old, who's listening to us right now. It's not mandated at their school. They're getting ready for college. What would you say your top three tips that you would give them in terms of managing money, managing debt, particularly when it comes to student loans?
ROSS MAC: One, managing money, I think every person in the world needs to understand budgeting, right? I think that especially when you're a college, right, maybe your parents are giving you a set amount of money every month. And guess what? You now are going to have to decipher, say, if you want to go out and party or if you need to buy books or if you need to buy food. So I think budgeting is very critical.
And I think understanding debt is obviously one of the more pertinent things that kids need, because quite often you're graduating with debt, one being student loans and next is probably credit card debt. And I think that that's very important to, one, also understand the importance of your credit score. I know when I came out of school, I needed my mom to be my cosigner for-- to actually even apply for rent.
People need to understand when it comes to credit scores, you would just think like, oh, maybe it's for actually getting credit. No. They can run your credit for a job interview as well as in order to actually rent an apartment. And so I think these are some things that kids definitely need to understand. And obviously, investing, people need to understand that quite so often, in society, we're taught, OK, you're doing good by purely saving your money, when the reality is, no, we need to be taught in schools that there's something called inflation. And by purely putting your money in your just bank account that's giving you 0.3% interest rate, no, you need to be finding a way to outpace the rate of inflation, which is generally 2% to 3% in a good year.
SEANA SMITH: Ross, from your followers, there's been a lot made about the fact that we're seeing differences in terms of how various generations approach personal finance. From your followers, do you see a huge difference when you compare Gen Z to the generation right above them, millennials? And how so?
ROSS MAC: I think due to the technological advances and access to information as well as the ability to start investing, everybody is now trying to figure out how to make more money and finding different ways. And so I think that some of the same problems still exist, that being people still living paycheck to paycheck. And but just due to social media, one, you have more access to saying, OK, let me open up a Robin Hood or something. Let me now try to invest in, you know, not to look from 100 years ago, but now maybe it's NFTs.
But I think that the overall-- the big commonality is people are always trying to potentially get rich quick. But I think there's more information, especially being able to look at the TikToks and the YouTubes and the Instagrams, to actually find smarter alternatives, to actually understanding how to invest and understanding how to budget and manage a checkbook.
SEANA SMITH: Ross, how do they know who to trust when they're turning to TikTok, when they're turning to various social media platforms? I know you give financial advice. But someone out there, how do they know who to trust versus who not to trust?
ROSS MAC: Well, there's truly no right answer, right? But I will say you need to just continue to do your due diligence, understand some people have ulterior motives when they're telling you to do something. And so when it comes to me, I'm going to leave by saying, this is my background. I went to this school. I went to Wharton. I worked in finance for over five, six years. And more importantly, this is my mission to help better inform and empower my audience.
But I think at the end of the day, continue to do your due diligence. And just make sure that people don't have ulterior motives.
SEANA SMITH: Very important advice there. Ross Mac, always great to have you. Look forward to speaking with you again soon.