I was lucky that my high school taught all juniors and seniors about personal finance.
Admittedly, I tuned a lot of it out, and I often regret that I didn’t pay more attention.
But by the time I graduated, I knew that it was crucial to have a budget, and I understood interest rates well enough to know that I should never carry a balance on my credit cards.
Fortunately, my experience isn’t unique. More schools are starting to make financial literacy part of their curriculum.
According to the Council for Economic Education’s annual Survey of the States, 17 states in the US now require that students at public high schools take a personal finance class before they graduate. (Economics or civics courses that cover personal finance count.)
Less than 20 years ago, personal finance education was only mandatory in one state: Illinois.
“We can attribute part of that to the economic downturn,” says Susan Sharkey, senior director of the High School Financial Planning Program, an offshoot of the National Endowment for Financial Education (NEFE). She says that the nationwide increase in consumer debt and student loan debt is also a concern.
As a response to the growing demand for financial literacy education, NEFE developed a curriculum that it provides for free to schools. Teachers who want to introduce personal finance into the classroom but don’t know where to start receive workbooks, materials, and lesson plans. Other organisations, like the National Financial Educators Council and the Council for Financial Education, have done the same but charge for access to those resources. Sharkey estimates that NEFE reaches 12,000 instructors each year.
Some of the demand comes from students themselves. In Rhode Island, a group of high school students has been campaigning to make financial literacy a graduation requirement.
Charlotte Palmer, 17, told the Providence Journal, “No matter what you want to do in life, it all comes down to personal finances.”
But finding qualified teachers can be a challenge. Sharkey says that this is one of the main problems schools hoping to introduce personal finance into the curriculum face. “We see a lot of instructors who know it is important, but don’t feel confident enough to teach it.”
A study funded by the organisation found that 89% of teachers believe that personal finance should be a mandatory class, but only 20% believe that they could competently teach that class.
While that number might seem low, Sharkey points out that teaching financial literacy can be challenging. For instance, teenagers in low-income communities may have grown up with parents who are “unbanked,” meaning that they lack the minimum balance to have a checking or savings account. They are likely to have different needs from middle class students whose main concern is how to pay for college.
“One size does not fit at all,” she says. “You have to keep in mind a variety of different backgrounds.”
Teachers also have to keep the material age-appropriate enough to hold a 17-year-old’s interest. “We can teach them about compound interest and investing, but might not go into details about retirement funds,” Sharkey says.
The curriculum that NEFE has designed is intended to be relevant to teenagers between the ages of 13 and 18, covering topics such as insurance, budgeting, credit cards, loans, earning potential, saving, and investing.
How much of a difference can classes like these make? A study conducted for Discover found noticeable results. High school seniors who had taken a personal finance class were more likely to save money (93%, compared to 84% of students who hadn’t taken a class), have a budget (60%, compared to 46%), and invest (32%, compared to 17%).
And for most of them, unlike the finer points of chemistry or precalculus, it’s safe to say that this is knowledge they will be using for the rest of their lives.