Why High Schools and Colleges Need to Start Requiring Personal Finance Education
Nearly half of adults claim they are inadequately prepared for retirement; with consumer debt again rising to historic levels; and with fewer than one in 10 adults able to come up with $1,000 to cover an emergency expense, it’s not too much of a stretch to say that America has a financial literacy problem.
Young adults especially are unprepared when it comes to making important decisions about credit, borrowing and saving. This is why more economists, educators, and parents are demanding that we begin to teach personal finance in high school.
Young People Launched into a Complex Financial World
Part of the problem is that the number and complexity of financial decisions people have to make today is increasing. By the time young adults reach the real world, they are forced to make important financial decisions. But what experience do these young people have about credit cards, banking and investing products and employee benefits? There are so many financial products and options from which to choose. Most adults, young and old, are overwhelmed with the amount of information and they don’t know where to start.
By the time they graduate high school, kids are making choices about what type of post-secondary education to pursue. And how they are going to pay for it. Before they know it, they are leaving college with $30,000 of student loan debt, with no way to repay it after taking which ever underpaying job is available to them. From there they are forced to learn critical aspects of personal finances “on the job.”
By the time they are 30 years old, they can make enough significant mistakes to last a lifetime.
Today, more than 60% of student borrowers spend their working lives climbing out from under student loan debt. Many of them begin charging up their credit cards just to be able to meet minimal life style needs. As a result of their student debt, most student borrowers have to delay saving for a home or retirement. Nearly half put off getting married and starting a family. The ripple effect of financial illiteracy spreading across the country is hurting generations of Americans, harming society and the economy.
Most Agree it is Needed but Few Offer it
Nine out of 10 adults agree that personal finance should be taught in high school. Even teens have expressed a desire to learn about personal finance in class, with 86% saying they would rather learn it there rather than through trial and error in the real world. However, most states do not require their high schools to offer personal finance as a stand-alone course in high school. Personal finance or money management is very rarely offered as a course in college
One reason for that is that personal finance concepts are not included as part of standardized testing or college entrance exams. Another reason is, according to a University of Wisconsin study, less than 20% of teachers feel qualified to teach a personal finance class. And, where there is an interest in personal finance courses, educators can’t agree on what they should consist of and how they should be taught.
Another study found that personal finance is not taught at home either. That is primarily because parents won’t even broach the subject with their children; partly because they are uncomfortable discussing personal finances with their kids, and partly because of their own lack of knowledge on the subject.
What Parents Can Do
Some nonprofit groups, financial firms and federal agencies have stepped up to offer programs for teaching literacy. Many of the big banks, such as Bank of America and Wells Fargo offer learning programs as do financial services firms like Visa. Many of these programs are offered via online learning platforms. They’re good and they’re a start, but their reach is limited and their efforts are often disjointed and diluted.
Those in a position to clearly understand the problem – parents, educators and elected officials – are also best positioned to do something about it. Parents can express their concern and demand curriculum changes through their local school boards. It would help to have some educators on your side when making your case. The PTA is a great place to build an alliance with educators. Parents should also be making their concerns known to their elected officials. In most states, education is a function of state government, so cornering your state representatives would be your best bet.
While these actions are necessary to build advocacy for curriculum changes, parents can’t wait for the slow turning wheels of politics and bureaucracy to do what is needed. Teaching your kids what they need to survive financially is as important as anything else you can give them as you get ready to launch them from the nest. Check with the banks in the area that offer free courses and have your kids take one as a prerequisite for getting their own debit or credit card.
Chime in!
Most of you that read this blog are also parents, some of you are also educators. Should we teach personal finance in high school? Should it be a required part of the curriculum?
Lauren Davidson is a soon-to-be graduate from the University of Pennsylvania with majors in English and Communications. As she shifts into the “real world” Laur hopes to start a freelance writing side hustle to help pay down her student loan debt.
24 replies on “Teaching Personal Finance 101 in High School”
Great post Laur! As an educator, parent and PF blogger – I feel strongly about the requirement of a basic finance education course in high school. It would be terrific if parents could teach their children this information at home, but many do not have the ability to do this (for a variety of reasons). There are many schools that teach basic personal finance as a part of introductory business classes and some even include it as a part of health class (personal health). Money and debt is a taboo topic in many families and that script needs to change. Thanks for sharing!
Thanks, Vicki! There were a handful of people I was looking forward to hearing from on this post, and you’re definitely one of them. Agreed that a home/school combo would be best for the kids, but that’s just not going to happen right now since so many families have financial issues. Gotta learn to crawl before you can run! This is a good first step to changing the way we talk about and handle money.
Thanks so much for the kind words Vicki!
I definitely agree that the solution is two-fold. Parents can teach basic money lessons early on with allowances and having their children save birthday money. At some point later on, schools have to come in to introduce some more complex topics that maybe all parents aren’t comfortable with.
Great post. With all the knowledge available at our fingertips seemingly, so many are still ‘not doing’. I think even if they learned it in school, it still takes some real life education (mistakes, debt repayment) to really make it sink in. Education can certainly help. After-all, you can’t do what you don’t know. But I think it’s getting to harder and harder to use the excuse of ignorance. Thanks for sharing.
I think a project-based learning curriculum would be so valuable with this topic because, as you called out, it would give you more of a ‘hands on’ approach to learning.
Thanks for commenting, Chris!
I agree that just because some students take classes doesn’t mean that they will be successful in the real world. I’ve definitely learned lots of money lessons just by trying (and often failing) to manage my own money. At least classes or information from parents can help form a basic understanding that can hopefully reduce the amount of and severity of these early mistakes.
Nice post, Lauren. I agree there may be a benefit to personal finance being covered in schools. I think it should start at home, but additional knowledge provided in schools could help. Money wasn’t discussed at all when I was a child and I’m more open with my kids now than when they were young, but I know more now too.
Congratulations on your graduation, Lauren! And thanks for sharing her post Ty!
Thanks so much Amy!
Thanks, Amy!
Great post, Laur. I agree finance needs to be taught before high school graduation. But I don’t like the idea of Bank of America, Wells Fargo, or Visa doing the teaching. That’s sort of like cigarette companies issuing warnings that smoking is bad for you.
Ty, I like what Brian @DebtDiscipline is doing, working on a committee within the school system to develop a financial curriculum.
I wasn’t aware that Brain was doing that – very cool! I’m also working on something, but I’m not able to disclose exactly what that is just yet … soon hopefully! Thanks, Mrs. G.
Great post, Laur. I didn’t know that banks and credit card companies offer these courses. Have you taken any? It would be interesting to see how biased the material is when the sponsors benefit from people choosing to stay in debt.
I’d like to see that material as well, Julie. Long term, I don’t think I’d want our financial institutions taking the lead on this, but I have zero problem with their involvement (assuming there isn’t any bias or marketing woven into the message).
Great post, Laur. I agree 100% that finance should be taught in school, and I think it should be taught at all levels – elementary, high-school, and college/university. Quite honestly, it should be given more important than any other subject because it’s applicable to everyone. I even think the way that student loans are distributed should be questioned. Why are lump sums of cash given out to kids rather than bi-weekly or monthly payments like in the real world? Payments should mimic a salary so that it teaches better financial management. Thanks for sharing!
I felt like a king when my student loans would get deposited into my accounts! I guarantee I would have handled my “windfall” much better had it come twice per month or something that resembles a normal paycheck. Great idea, Grant!
This is a subject that needs so much more attention brought to it…Thank you for the great piece! How is it that something that we will use every day for the rest of our lives doesn’t have any standardization in the educational setting? When my kids were in elementary school in Michigan, a local Community Bank had a program where each Wednesday morning they came to the school and took deposits of small sums for kids and the child could pick out small prize (stickers, pencil, erasers) for their deposit….it made saving rewarding and something they looked forward to and they learned the concept of saving early on. With all the complex decisions young adults face today and the seduction of credit card companies on college campuses leaving students in debt other than their student loans, they need to have a strong Financial foundation so they make smart choices. Knowledge leads to better decisions. At Smart Start Personal Finance, we coach young Adults (and others) in Personal Finance…we basically educate them, no financial advice….we have seen wonders within our program, increased credit scores, establishment of emergency funds, Goals set with ” how to” Plans established to reach them. Lets keep bringing this to center stage, it is important!
Love your approach: teach people and let them make their own decisions. My hunch is that once people have a basic understanding of personal fiance, then they are more than willing to reach back out to you for more in depth advice.
I definitely agree. UK school now have it on the curriculum but its patchy at best.
I was super lucky cos my school was linked up with a charity called young enterprise, which gives college students the chance to build and run a business for a year. Easily the best educational experience I had for several reasons. You have to work in a team with people you don’t always agree with, balance the business with other priorities (exams and course work) and of course the aim is to make some cash. Its the hardest cash I’ve ever worked for!
I lived in the UK for a few years and liked a few things about your education system. I didn’t know there was a project-based learning approach to fiances, but add that to the list of things I like!
Laur, great advice in regards to personal finance. Agreeing with you that when a student graduates high school they leave a lot of personal debt / student loan in which they know nothing on how to repay them. Anyways, thanks for sharing this heads-up and informative article with us. Keep up the great work!
Thanks for sharing valuable information.
A Personal Finance course it an absolute must Keep the government out of the decision. Enough government involvement in stupid stuff.
Thanks for sharing valuable information.
I certainly concur that the arrangement is two-overlap. Guardians can show essential cash exercises right off the bat with stipends and have their youngsters spare birthday cash. Eventually, later on, schools need to come in to present some more intricate subjects that possibly all guardians aren’t happy with.
This article does a good job of pointing out the statistics related to student loan debt, and I believe that changes will take time. Dave Ramsey’s Foundations in Personal Finance is offered in 42% of US high schools, which is a much better alternative than training from financial institutions who will point to their loan options in lieu of having an emergency fund. Parents can find ways to teach their kids about money by reading Smart Money Smart Kids, and by taking Financial Peace University. Over 5,000,000 households have completed FPU to reach their goals to get out of debt, pay cash for college, invest for retirement, build wealth, and give generously. Although the program provides the knowledge, it focuses on behavior with money.
Laur, agree with this x 100000. Sigh, if ONLY!
Like so many others, I learned about personal finance well into adult-hood via the internet. I spent at least a decade making all of the mistake – if only those pitfalls could have been avoided!
Thanks for the great read.