One of the problems in academia (more specifically in public education), in my opinion, is the lack of financial education given to students.

While subjects like history, science, physical education and math are important to developing a well-rounded student, they don’t always lend themselves to the more tangible and practical lessons found in financial education.

Calculus and Algebra can teach you to think logically, and even apply directly to future careers (looking at you mechanics, programmers and chemists), they won’t necessarily help you set up a budget, choose a pre-Tax or Roth 401k (or IRA) or help you determine which types of accounts you can open to make the most out of your money.

This is not a new debate

People have been arguing (or “debating”) about the merits of teaching financial literacy for some time now. The gist of it is that the topic doesn’t necessarily jive with more “timeless” liberal arts — things like tax and financial law change frequently, at least in comparison to like the Pythagorean theorem — particularly so if efficacy of the subject is debatable (one study showed that students who took financial literacy courses ended up having identical scores to those who didn’t: ouch!). It’s a strange topic to tackle politically as well.

This doesn’t make the matter as less important. As much as the bank and ratings agencies share a large portion of the blame for the Sub-Prime Mortgage crisis, where they sliced-and-diced bad mortgages and created incentives to give loans to anyone they could — the consumer also shares a bit of the blame for taking those deals. A large portion of the worst mortgages put into these products were made to people who couldn’t even make their first payment. In Michael Lewis’ *The Big Short*, he describes how mortgage salesman targeted recent immigrants and underserved people, offering them crazy deals to get them (and their brand new, perfectly untouched credit rating) into Mortgages they could immediately sell.

One instance seems so outrageous it’s almost unbelievable:

“In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $724,000.”

Examples like this can be found all though the book — an exotic dancer who owned 5 homes, a bond salesman’s Nanny who bought almost an entire block in queens, the mobile home market.

Though it’s obviously morally wrong to sell complex things laden with risk to people who don’t understand what they’re getting into (especially if they’re new to this country), a small portion of the blame also lies with the individual (and, by implication, the society which produced that individual) for taking the bait.

Where would we start?

If we were to start teaching our children financial literacy, where would we start? Mortgages are complex, bonds are boring. Options, derivatives and futures can be insane.

But how about compound interest?

Compound interest is one of those things that can make a huge difference in your financial life, but only takes a minute to learn. It can underscore the importance of savings (and on the flip side, paying off your debt), and can lead you to make educated decisions w/r/t what type of accounts you open and how you set up your monthly budgets — essentially, how you lead your financial life.

The basic idea is that when you put money into an account with interest, that interest will add up — for example, f you put $100 into an account with 2% interest a year, at the end of year one you’d have $102. However, at the end of year 2, without putting any more money in you’d have $104.04, and in year 3 you’d have $106.12. Essentially, your money is making money for you, with no effort on your part.

The best (and most famous) illustration of how this looks at scale is one from Philadelphia’s favorite (adopted) son, Ben Franklin.

In 1789, Ben Franklin added a clause to his will (mostly to prove Charles-Joseph Mathon de la Cour wrong) of approximately $4,550 to both Boston (the city of his birth) and Philadelphia (his, ahem, real hometown) with the condition that it would be left to gather interest for 200 years.

There were a few strings and conditoins (which the cities both disobeyed), but in the end, that small fund turned into $5,000,000 for Boston and $2,000,000 for Philly (though both would have likely totaled $20,000,000 each if they had followed all of Benny’s conditions).

Not bad for essentially leaving money in account, no?

This effect obviously heightens if regular deposits are made (more money means more money), and the concept is well-documented, with awesome tools that can help you visualize the tangible benefits.

Not the Answer, but Somewhere to Start

For now the responsibility to teach children financial literacy lies with their parents, or, in the case of their parents not being financially literate, the children themselves. This produces inherent problems (which may take generations to unfold), but only underscores the importance of the lessons themselves.

Small things like this, the differences between 401ks or how index funds can be helpful might make a world of difference in someone’s life.

So, make Ben Franklin proud and go teach someone you love about compound interest today.