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State of the Union: Obama's Stealth Plea for Financial Education

The president's State of the Union speech amounted to a ringing endorsement for teaching kids about money in school, and for a bigger effort at financial education in general. You had to be listening for it. But it was there.

"Many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown...If you worked hard, chances are you'd have a job for life, with a decent paycheck, good benefits and the occasional promotion."

But that was a long time ago, when folks who tripped up financially were cushioned by a broad social safety net including a private pension and robust Social Security benefits. Today, the safety net is threadbare. Our kids will be on their own like never before as they plan their future and confront a baffling array of financial products and information. They'll need to understand how money works, or risk hitting the ground hard.

"The rules have changed. In a single generation...nations like China and India realized that with some changes of their own they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science."

And guess what? China and India are churning out engineers and scientists. That's how it works. You reap what you sow. In the States, we have formally recognized the need for more and better financial education. But we have yet to really commit to it. So we will continue to turn out high school and college graduates who don't understand how to compare credit cards or cell phone plans.

"If we want to win the future -- if we want innovation to produce jobs in America and not overseas -- then we also have to win the race to educate our kids...the question is whether all of us -- as citizens, and as parents -- are willing to do what's necessary to give every child a chance to succeed."

The president was talking about global competition. But the same words can be applied to personal finance. Right now, as a community, we aren't doing enough. So the onus is on you, as a parent.

"That responsibility begins not in our classrooms but in our homes and communities. It's family that first instills the love of learning in a child."

No question: parents play the crucial role in educating kids about money. This stuff is not taught in our schools, at least not in a meaningful way.

"Our infrastructure used to be the best, but our lead has slipped...We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, and constructed the interstate highway system."

We also blazed an early trail in the effort to cultivate a more financially literate population. But we have begun to fall behind nations like New Zealand and Australia.

"We are living with a legacy of deficit-spending that began almost a decade ago...We have to confront the fact that our government spends more than it takes in. That is not sustainable."

Not for government; not for you.

"So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years...This freeze will require painful cuts."

Why not freeze your household budget too? For the next year or two or three use any raises, freed up cash from retired debt or other new income to boost savings. Tell the kids what you are doing and challenge them to help by sticking with their old cell phone and wardrobe a little longer. A good example at home is where financial education starts.

Photo courtesy Flickr user shaunpierre
More on MarketWatch:
· Financial Education: Where We're Going
· Taking the Lead Down Under
· Financial Advice from the Feds - Coming Soon?
· The Top Reason Kids Don't Learn Money at School
·Teaching Kids About Money, What We're Up Against
· Financial Education Takes a U-Turn
·Taking Financial Education to the Next Level
· Students in Debt: $1 Trillion Hole and More Dropouts