Are You a Winner?

Two lucky people woke up this morning mega millionaires. After yesterday’s lottery ticket buying frenzy, one winning ticket was sold in Idaho and the other in Washington (see here). The winners will share equally the $355 million jackpot.

Sounds like a dream coming true, right? Unfortunately, for many lottery winners, winning the lottery eventually leads to bankruptcy (see here, here and here). Statistics tend to show that a good portion of lottery winners file chapter 7 or chapter 13 personal bankruptcy cases within five years of receiving their jackpots (see here and here). In one sense, the tale of doom attached to big lottery winnings seems similar to the ploy of telling a bride that rain on her wedding day signals good luck—it makes those of us who didn’t win feel a little better. In another sense, however, it highlights a real problem in our approach to financial education.

Yesterday, the American Bankruptcy Institute reported a significant increase in overall personal bankruptcy filings. Undoubtedly, some of those filings are the direct result of the recession, and some filings stem from similar unforeseen changes in circumstances, such as divorce and serious health problems. But many personal bankruptcies involve honest, unsophisticated individuals who simply do not understand or have the skill set to manage their personal finances. Yes, these individuals should take responsibility for their finances, but they also need training and resources to be successful in that endeavor. Studies suggest that many high school graduates do not understand how credit cards and other basic financial instruments work (see herehere and here), yet most carry credit and debit cards in their wallets.

I appreciate the enormous challenges facing the U.S. education system. As we evaluate these challenges, however, we need to consider financial education as part of the core curriculum. We also need to continue working to provide meaningful financial education to adults (for an interesting study concerning financial education and bankruptcy, see here). Although the 2005 amendments to the U.S. Bankruptcy Code incorporate a consumer education component, that requirement has become little more than the potential debtor sitting in front of a computer screen and answering a few questions in order to be able to file her bankruptcy petition (for other perspectives, see here, here and here; for an excellent study regarding the impact of the 2005 amendments on consumer debtors, see here). I hope that as the economy recovers, so too do our financial education initiatives  (see here and here) so that more individuals have a real chance at sustainable financial health.

You may also like...

2 Responses

  1. It’s been a long time since I was in high school, but back then “financial education” fell under the heading of “home economics” in the curriculum, perhaps that’s something we could resurrect or re-visit (with its equivalent for adult education courses). At the same time, I would hope students and citizens would also become more “critical” with regard to their thinking about economics more generally (i.e., to be able to conceptualize the economic principles and practices of capitalism in a systematic fashion, to be able to see these alongside the values, principles and methods we associate with democracy and so on), although that may be hoping beyond hope.

  2. Michelle Harner says:


    I think you identify one of the core issues—at least for financial education in the high school curriculum. Where exactly does or should it fit? Many characterize it as a “life skill” that does not fall neatly within a traditional category. One approach is, as you note, home economics or an equivalent offering. I have set forth below a link to a really interesting 2007 study of Ohio high schools that shows, among other things, no uniform approach. The most common categories to embrace financial education were courses in family and consumer sciences, business education and social sciences. Most teachers, however, reported time and resource constraints on their ability to integrate meaningful financial education. Also, fair point on the need for more critical (and I would add reflective) thinking.

    Thanks for the comment, Michelle.