Think back to high school – did you take a personal finance class? Maybe you learned a little something during economics, but that was right after lunch and all you wanted was a nap. During my high school experience I was not required to take a personal finance class to graduate, nor was such a course offered. In a recent video interview from The Street with Ted Beck, the President of the National Endowment for Financial Education, titled “Here’s Why Your Kids Aren’t Learning About Money in School,” Beck explains that as a nation we’ve really let financial education slip. Beck says we can even look back at textbooks from 1900 and find that “financial education used to be embedded in every math and arithmetic book you could find.”
So why should we teach personal finance in schools? I mean, we’re fine right? Sure, we are! In a study conducted by the National Foundation for Credit Counseling, 59% of American adults said they deserve an “A” or “B” when it comes to their own personal financial knowledge. Well, that’s pretty solid. More than half of those adults felt confident. These are the same adults however, (75% of them) that agree they would benefit from advice and answers to everyday financial questions from a professional. That’s right, the same adults (70%) that are currently worried about their personal finances yet (60%) continue to spend without a budget. These folks don’t sound like they’re at the top of their personal finance class after all…
Here it is! Three reasons we need to teach financial literacy and personal finance in schools:
1. TAKE A LOOK AT THE RECENT RECESSION – this has certainly highlighted the importance of financial literacy. In the Huffington Post article, “States Lag in Educating Students About Personal Finance,” author Pamela M. Prah writes, “…people purchased homes they could not afford by signing mortgages they did not fully understand.” When people have an understanding of personal finance they are able to make more informed decisions as consumers.
“Financial education supports not only individual well-being, but also the economic health of our nation … Consumers who can make informed decisions about financial products and services not only serve their own best interests, but collectively, they also help promote broader economic stability.”
Former Federal Reserve Chairman, Ben Bernanke
2. OUR EDUCATORS THINK IT’S IMPORTANT – The need and importance of personal finance curriculum is recognized by our educators. According to a study conducted by the National Endowment for Financial Education, “89% of teachers believe that personal finance should be a mandatory class, but only 20% believe that they could competently teach that class.” If not even our educators feel they have the ability to teach these courses confidently, it is obvious the systemic result of an unsupportive education system. Our teachers cannot teach this subject because they were not taught or not taught enough.
3. THESE CLASSES MAKE A DIFFERENCE IN STUDENTS – In an article from Business Insider titled, “High schools are finally beginning to require personal finance courses,” the author writes that a recent study conducted by Discover shows that, “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%).” Personal finance isn’t like that chemistry or pre calculus course you took – money management skills will be used for the rest of your life.”
Currently, only 17 states in the US require a personal finance class to graduate. Twenty years ago, only one state required such a course. Personal finance and financial literacy however, is not the utmost responsibility of our schools and teachers, but rather a shared responsibility. Parents, teach your kids about money and personal finance courses in our schools will reinforce. In the same video from The Street, Beck tells parents to find teachable moments – trips to the store or looking over the bill. He encourages a positive attitude regarding money because a positive financial dialogue can really set the tone.
Piggybank understands the importance of financial literacy and seeks to provide parents with a platform to make that financial dialogue a little easier. By leveraging real world experience we put early financial education in the palm of your hand. For more information please visit getpiggybank.com