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.
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?