Why Personal Finance Should Be Taught in More High Schools

I was shocked sitting through high school curriculum night last week, it was supposed to be a chance to hear about the diverse class offerings that were available now to our kids as they undertake some of the most pivotal years in their lives.

Now, don’t get me wrong – the school looked great and had very experienced teachers, but what shocked me was the lack of personal finance classes on the elective list. How are these kids supposed to learn to manage money, create budgets, and even begin to understand credit scores before entering the “real world”? Without the opportunity to get even the base level of financial knowledge in the high school curriculum, are we truly setting our children up for financial success?

Less than 20 years ago, personal finance was only required in one state, Illinois. Today still only 17 states require high school students to take a personal finance course, per the Council for Economic Education.

high school personal finance

Why is Personal Finance Important in High School?

Some might be thinking that personal finance should not be considered one of the “core” high school classes: math, language arts, science, and social studies; and I would agree with them. However, similar to how personal fitness is a required elective class, I envision some form of a money management course as a required elective.

A recent study showed that 89% of teachers agree that students should take a financial literacy course or pass a test for high school graduation.

With the amount of student loan, personal credit card, and even national debt ever rising, it is important that we shift focus to better financial literacy for our next generation.

Key stats:

  • Student Loan Debt stands at $1.4 Trillion,
    • Second largest class of consumer debt after mortgages
  • 4 out of 10 Millennials say they are overwhelmed with debt
  • 50% of Millennials say they are living paycheck to paycheck and unable to save for the future
  • 75% of credit card carrying college students were unaware of late payment charges
  • 43% of Millennials use costly non-bank borrowing methods like payday loans, pawn shops, and rent-to-own stores

If students go to college, and if their major is under the business school umbrella, there are actually many optional finance courses available that would greatly increase their knowledge around money management, credit scores, investing, and savings rates. However, not all paths lead to a business school major, or even post secondary education.

The Bureau of Labor Statistics reveals that only 69.7% of high school graduates enroll in colleges or universities after high school, meaning 16.3 million young people are entering the workforce with little to no school knowledge of personal finance.

Challenges Facing Personal Finance Cources in High Schools

There are plenty of facts around (some included in this article) the need for money management courses in high school. The discussions are slowly shifting from, “Should financial literacy be taught in school?” to more or a question along the lines of “How do we make teaching personal finance in high school a reality?”

“Less than 20% of teachers reported feeling very competent to teach personal finance topics”

One challenge is finding adequately trained teachers for the subject of personal finance, especially if it is to become a required class for graduation. Teachers become certified to teach subjects through subject areas learned in their college majors, for example – math and science teachers for the most part, studied higher level math and science classes during college.

While there are finance classes offered in college, in order to make schools require personal finance classes to graduate there has to be further certifications for teaching money management courses to ensure high standard of quality and consistency. It is true that not all subjects require teachers to have a deep background in the subject matter, but those are normally electives that are not set as requirements for graduation.

Should personal finance topics be taught at the home and not at the school?

I believe that personal finance should be taught at home, as well as in the school. Studies have shown that 72% of parents experience at least some reluctance to talk to their kids about financial matters. This percentage likely includes a large amount of parents that do not feel they have the skill to teach their children about money management.

As a society we have baby boomers unprepared for retirement and millennials strapped with debt living paycheck to paycheck, we need to evolve by requiring higher financial literacy from the next generation in order to prepare them for financial freedom.

What Personal Finance classes are needed?

The specifics on what should be included in money management courses offered in high school really starts with the basics; below are course subjects to start with that are either my suggestions, or are already in place in states requiring personal finance courses:

  • Planning, Saving, and Investing Course
    • Saving Accounts
    • Interest Income Basics
    • Asset Building
  • Credit and Debt Management Course
    • Sources of Credit/Debt
    • Evaluate Interest Rates and Fees
    • Value of Credit Score
  • Relating Income and Education Course
    • Career Choice
    • Sources of Income
    • Taxes and Insurance

“To be successful, most kids don’t need to learn about collateralized debt instruments, but they do need to know how to open a bank account, how much they need to save each month to reach their goals and, if they borrow this amount of money, how much money they will need to earn to pay it back.”

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