Why Rising Education Cost May NOT be The Future
Tuesday, August 12, 2008 | Chris RoweRating:
I just came back from lunch. I met with a family of 6 from Chile that have been members of The Trend Rider, Point and Profit, the Internal Strength System and ETF Master Trader for a long time. My article today is about why this family sets a great example for families around the world. Specifically, I'm talking about their stance on their children's education (not to mention their own). I was truly blown away and when I find something that I think most Tycoon readers can benefit from, I write about it. Hopefully I can multiply their good fortune by a hundred thousand today. And please leave comments on the subject if you have them.
First let me start by setting the stage -
We are talking about a family of six (lovely couple with 4 children). I almost never meet privately with members of our programs simply because my schedule is always slammed. So to be honest, after agreeing to meet with them I started regretting the decision as the day was approaching, especially after I envisioned sitting at an awkward stiff lunch conversating superficially with the Brady Bunch.
But from the time I shook hands and made eye contact with each of them I knew I was in for a relaxed and fun time.
Immediately we start talking about most societies' conventional educational process verses home schooling. This was a family that believes in home schooling their children. They were actually going to an entrepenure's seminar in Georgia - and they were going mainly for their kids!
My thinking on the subject of home schooling starts with three basic points:
1. Most people would label home schooling as a bad idea because it might be more difficult to get a job in the "real world" without a formal degree of some kind, and because it may rob the kid of the social environment that comes with school.
But when you think of home-schooling, keep an open mind for a second. Don't just think about the cliche; parents standing over their kids and trying to force them to think the way they do in a very strict manner, or the ones who keep their kids in a bubble and talk about how evil the outside world is. If you met this family, those images would shatter right away.
2. Traditional schooling leaves out so much. This happens on many levels.
For instance, schools in the U.S. tend to teach history from the United States' point of view. They tell the stories of World Wars 1 and 2 as seen in the eyes of the United States. The list goes on, but I'll stop at that example. The point is there are always many different views of history, and it makes sense to understand things from more than one point of view.
Something else traditional schooling tends to be seriously lacking on is financial education. This doesn't mean we have to teach our kids how to trade stock options. But managing money once you've made it is clearly something that 99% of people don't have a good understanding of.
For instance, the way your credit score impacts your life. It's the difference between being able to get a loan at a good interest rate, or even at all. Traditional schooling at the basic level surely doesn't educate kids on the impact of compounding returns. If you start with $10,000.00, and make 7% over 30 years, you end up with $76,112. Some would think that if you make 14% in the same time frame you'd end up with twice as much, but the reality is you'd end up with $509,501.00.
Also, if you're someone in debt, you often find yourself on the wrong side of the "compounding interest" lesson.
3. While I constantly hear people talking about how expensive education is going to be in the next 10 years (the cost is already increasing fast), I wonder if people will begin to take a different view of how to educate their kids. I know my kids will certainly acquire an education you won't find in schools today.
Think about this for a minute:
When we talk about how expensive education is going to be in the future, we're thinking the education system as we (people currently age 30 or over) have known it. They now have a tool for education that we didn't have growing up called the "in-ter-net". Instead of learning the Dewey Decimal system so they can figure out what shelf a book is on at the library so they can look up information, they can go to a website called "Goo-gle". You've probably heard of it.
In a world where you can type a word, words or a phrase in a box and get the most relevant information found on the WORLD WIDE web, education is 1,000 times more fun. Therefore, people digest the information much better and they learn much much faster. So the difference is obviously navigating your own path verses structure that you'd find in a school. Two positives about traditional schooling is structure, and being well rounded because you're forced to learn about certain subjects in order to get the degree you want.
But the structure found in school can be helpful or harmful, depending on the person, and the same is true on the flip side. Different people need different options and until recently there have been few options available.
In the "olden days" we were also interested in educating ourselves, but it was like sitting at a restaurant that has a very small menu of food that not everyone found appealing.
In such an early stage of the information age it's hard to imagine, but my question is: What will a world look like after 20 more years of having accessible, personally targeted, education available to you in the comfort of your home?
What will the cost of education really be? I ask because when we talk about the increased cost of education, we're considering the current, traditional education systems we have in place today around the world. It's hard to imagine because the world with the internet - in the grand scheme of things - is still a very new concept, but my feeling is the change in the way many of us educate our children and ourselves is going to be enormous.
Let's change the term from "home-schooling" to "independent schooling" for a second because, with the internet in our lives, home schooling should be viewed much differently than before. And let's remember that independent schooling can vary from being very structured to a total free-for-all.
When I went to high school, there was so much "useless garbage" that I had zero interest in learning. So I didn't. I just passed the class (and not by much) just so I could advance to the next grade. The subjects I did have interest in got my attention, but at the school's pace and not my own. In some cases I wanted to move faster and others slower. In both cases, it made it a bit more boring. Does this sound familiar? Can anyone agree with me here?
Now I am NOT knocking traditional forms of schooling and I'm not saying independent education is for everyone. But imagine if all the time I spent in school that I felt was a waste, was spent learning about things I had tons of interest in. Maybe the rule with "independent schooling" should be that the student must focus on at least one or two topics that could turn into a profitable career path. But the fact is if you love what you do, you can be great at anything. Maybe the world would be much more productive if it were a world of people that were incredibly good at their craft instead of one where people are well rounded and don't do their jobs well.
"Independent schooling" is not the norm, but this allows the freedom to learn what you want and you'd learn it at a much faster pace. If you give them enough freedom, at some point they will find what they should find to be well rounded. And let's consider that being too well rounded may not be a good thing. Maybe it's like over-diversifying your stock portfolio. I guess it all comes down to structuring your life so that you experience as much happiness as possible.
Finally, I want to tell you that this family of 6 was very intelligent, down to earth, and fun to talk to. And that means a lot coming from someone from New York city who has had tons of exposure to all kinds of people in his life.
The 20 year old daughter impressed the heck out of me. Wow. What was so cool about her was how sharp she was and what was beautiful about her (in such a classy way) was her confidence. The reason I bring that up is it contradicted what I imagine many might be quick label a person who was independently educated. If you spoke with her, you would see that not only are the parents doing a great job, but that self education seems to work very well. She was clearly much brighter than your average person in many ways.
I think the key here is the parents commitment. Here we have two parents that are traveling to another country taking their 4 kids to an entrepenurial seminar. They go to many educational programs and purchase educational products. These are highly motivated people, and they are focused on giving their kids enough freedom to make the right decision, but they are doing so while balancing that with the right amount of guidance.
As we were walking back to their car we were talking. I asked if home schooling appeared to be a growing trend in Chile. The father said he didn't think so. Hardly anyone does it - much like in the U.S. - and he said the reviews he got were that parents didn't want to take "the risk" of home-schooling.
Doing something that goes against what everyone is trained to believe can be scary. But don't misconstrue that with risk. Be brave. There is a risk in anything that you do. It's risky to send your kids to school and hope they take care of everything. Not checking to see what level your kids are operating at - that's risky. Not talking your kids about touchy subjects and hoping they learn for themselves - that's risky. I would even say that restricting your kids too much is risky. (Remember the kids when you were growing up that were over-sheltered? They usually ended up swaying way to the other side the first chance they had.)
No family is perfect. Every family has problems, from spousal relationships to siblings and parent-child relationships. As a parent, keeping the right balance between staying involved, and allowing the freedom to chose the right path is key to your child's intellectual as well as their social development.
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“Profit from the Trend”
Chris Rowe
Chief Investment Officer
The Trend Rider
