Every year at the Berkshire Hathaway annual shareholder meeting, president and CEO Warren Buffett opens up the floor to questions and discussion. Through that, Buffett has shared his thoughts and advice on just about everything that someone could think to ask the octogenarian.
At the annual meeting in 2009, Buffett expressed his concern for the current generations financial literacy. The basic understanding of financial areas like investing, budgeting, taxes, or even personal finance could be getting lost in today’s world.
“I think there’s a problem with the current generation… Financial literacy is a tough sell in a world of credit cards and calculators. But we’re making progress over time. We recommend working with students to make them literate, and they’ll have a terrific advantage. We hope our annual reports contribute,” Buffett commented.
Buffett is right when he says we are in a world of credit cards and calculators. Today, fewer and fewer amounts of children are getting even a basic financial education, such as how to write a check. Rather, most people have smartphones, and therefore always have a calculator, access to the internet to check their account balance, and even apps that will track your spending habits for you. Buffett believes that simply by working with students or children to help them become (more) financially literate you can help them gain an advantage.
Charlie Munger, Buffett’s unofficial partner, also had something to say on the subject, “We’ve been going in the wrong direction. I don’t think you can teach people high finance who can’t use a credit card.”
Buffett agreed wholeheartedly, saying that if you’re going to pay 18% on a credit card, you really don’t have it figured out. Sadly, Buffett and Munger hit the nail on the head— a whopping 80% of Americans are in debt, and at least 38% have some form of credit card debt. Buffett believes that getting good financial habits early in life is very important, and even says that if we could get 2% of kids to have better habits it would improve the world. What do you think?