The State of Financial Literacy
High School Students Are Not Being Taught Financial Literacy
We would not allow a young person to get in the driver's seat of a car without requiring drivers education, and yet we allow our youth to enter the complex financial world often without any related education. An uneducated individual armed with a credit card, a student loan and access to a mortgage can be nearly as dangerous to themselves and their community as a person with no training behind the wheel of a car. Here are a few sobering facts:
- The most recent Jump$tart Coalition survey1 shows high-school seniors failing on personal-finance tests. The teaching of personal finance is often an afterthought because it is not a subject that students are required to be tested on in most states.
- Our children are also not learning these important life skills at home. Another study showed that parents are nearly as comfortable talking to their children about sex as they are discussing money. Really? The "sex talk" with your child is nearly as difficult to have as a conversation about spending, saving, and the use of credit?2
For our nation's youth, learning is often being done through personal experience. Making mistakes with your credit is a painful way to learn a life lesson.
Naturally, we look to our teachers to help solve this problem. Yet, a 2009 national study found that K-12 teachers are not confident in their ability to teach financial literacy3. But they are as concerned as we all are about this challenge, with 9 out of 10 of the same teachers believing such courses should be a high school graduation requirement.
Teaching Financial Literacy in High Schools is Important
Personal finance education should start early at both home and school, but personal finance education data that allows for state-by-state comparisons can only be gathered at the high school level. There is no national effort to keep track of such data at the elementary and middle school levels.
College data is not gathered, and for many individuals, educational opportunities end with high school anyway. So high school for many is the beginning of financial independence.
According to the Bureau of Labor Statistics, 68.3 percent of 2011 high school graduates were enrolled in colleges or universities. For those graduates who choose go on to higher education, personal finance education in college is scant and scattered, with few colleges offering a personal finance elective and even fewer requiring personal finance instruction as a graduation requirement. For those graduates who either do not complete high school or choose not to go to college, they will immediately be thrust into a situation where they need to know how to manage their daily living expenses. Given these facts, high school seems like the best and most logical place to deliver personal finance education to America's youth.
State by State Grades
2Charles Schwab Teens & Money Survey Findings: http://www.schwabmoneywise.com/public/file/P-4192268/110526-SCHWAB-TEENSMONEY.pdf
3"Teachers' Background & Capacity to Teach Personal Finance: Results of a National Study" by Way and Holden; see: http://www.nefe.org/Portals/0/WhatWeProvide/PrimaryResearch/PDF/TNTSalon_ExecutiveSummary.pdf