The Value of Teaching Financial Literacy in Schools

Haley Hitchman, AIF®, CPFA® |

With the costs of goods and services on the rise, many Americans are struggling financially. According to a poll conducted by CNBC in April of 2023, more than half of respondents were living paycheck-to-paycheck and did not have emergency savings set aside. With so many struggling to make ends meet, an effort to implement personal finance courses within schools is gaining more attention across the country. Financial literacy programs would educate our youth on personal finance subjects such as creating and managing a budget, using debt responsibly, how to improve one’s credit score and saving for retirement. In some states, efforts have been made with bipartisan support to implement educational programs within schools in financial literacy. However, according to NexGen Personal Finance, a nonprofit organization that provides personal finance curriculum and professional development for teachers across the US, there are only 24.6% of high schoolers that attend schools requiring at least one semester of personal finance courses and 23% attending schools where personal finance is embedded into another course. As of June 7th, Connecticut became the 21st state to require a standalone personal finance course for high schools.

In California there is no state requirement for financial literacy among schools, however, Bill AB2051 was signed into law to require the Superintendent of Public Instruction to allocate funding for the purchase of instructional materials in financial literacy for kindergarten through grade 12 and Assemblymember Kevin McCarty introduced Assembly Bill 984, which would make personal finance and financial literacy a high school graduation requirement. In a news release for the California Department of Education, State Superintendent of Public Instruction Tony Thurmond said, “Young Californians are entering the workforce and higher education with very little understanding of financial literacy. This is deeply concerning, since students with higher financial literacy are more likely to invest in savings accounts, prepare for retirement and manage their debt.” He went on to say “Only 27% of California high school students attend schools that offer personal finance classes. Ensuring that all young Californians have exposure to financial literacy is a vital step in closing inequality gaps and providing the skills and resources to improve their lives overall.”

The benefits of providing financial literacy education are abundant. Data from Georgia, Idaho and Texas saw credit scores rise and delinquent payment rates fall just three years after implementing financial literacy requirements. According to a national study by FINRA Foundation, those with higher financial literacy were more likely to make ends meet than those with lower financial literacy. The study went on to find that those with higher financial literacy were more likely to spend less than their income, have emergency savings and plan for retirement.

Learning responsible financial principles at a young age will benefit students in the real world and help establish good money habits for the future. These skills would undoubtedly benefit our youth by providing a strong foundation to make better financial decisions during their adult life.