It’s common knowledge that kids today aren’t learning the same things that we learned when we were younger. Take cursive, for instance. Forty-six states have implemented Common Core Standards on at least some level, which eliminates mandatory teaching of cursive in the elementary school curriculum. While children are instead learning how to type and use iPads — a needed skill in today’s technology-based word — it’s resulting in a generation of kids who cannot write their signature or read the Bill of Rights.
And, as many would probably assume, teens are also not getting a decent financial education in school. As a result, we have seen an influx of young adults who are uneducated about basic personal finance and how to properly manage their money.
The JumpStart Coalition for Personal Financial Literacy spent over a decade measuring financial literacy, with one aspect being the literacy among high school students. What they found was discouraging.
The survey asked students a number of questions on personal finance — covering topics such as retirement, credit cards, savings, and insurance — and the majority of kids failed each year. The first year surveyed, 1997, the students scored an average of 57.3%. A few years later, in 2002, this dropped to a 50.2% score. Then, in 2008, this dropped even further to a shocking score of 48.3% correct.
Mind you, these are basic financial literacy questions, and these children are obviously not getting the education they need. They are going into college and their first careers without really knowing how to manage their finances, save their money, or invest. Many of them have no clue how to file their taxes, either. This could end up being a frustrating, and even costly, shortfall.
Banking Deal: Earn 1.20% APY on an FDIC-insured savings account at Barclays.
Not surprisingly, the kids realize that they’re lacking. USA Today also reported that most students would even grade themselves as failing at their financial education. A more recent survey by U.S. Bank found that 65% of high school students across all 50 states and the District of Columbia ranked their financial knowledge as insufficient. Testing of these children’s states found that they were right, with more than half of them scoring a grade of C or less on the basic test given. In fact, 29% of them got a D or F.
So, these findings beg the question: Is a class on money management appropriate as a requirement? After all, this is a skill necessary to function properly in life. As one becomes an adult, with adult responsibilities, one must know how to correctly balance a bank account and understand credit card and loan terms.
But does personal finance fit alongside history, literature, foreign language, sciences and mathematics, art, and music — the “staples” of all public high school curricula throughout the United States?
While many of you are probably screaming ‘Yes,’ I would have to disagree. Hear me out on why I think that no, personal finance classes in high school would be an incredibly inappropriate use of students’ already overbooked time.
Teachers are not trained in personal finance
In most cases, teachers become certified to teach subjects through pedagogical education in college in their particular subject area. History teachers likely studied history education, and math teachers studied math education. When was the last time you saw a college offer a bachelors or masters degree in money management or money management education? Economics and accounting won’t qualify.
Not all teachers require pedagogical training. My high school had a wood shop and an auto maintenance department whose teachers may not have even been to college. But those classes are not listed as a state requirement for students.
Teachers are not parental replacements
Parents don’t generally teach their kids world and American history, literature, physics, and calculus. These are subjects that require textbooks and strong familiarity with subject matter, perfectly suited for teachers. While there may be some overlap, most parents can’t cover everything. However, parents can — and should — teach life skills like money management. Luckily, this is a topic that requires no textbooks and no special training.
Unfortunately, many parents don’t teach these skills. In fact, a number of them do not have the skills to teach. Either way, though, that is not a good enough reason to force high school teachers to take up the slack.
The public high school curriculum is not life training
While more states are beginning to focus on socio-emotional learning in public education and on life skills, the primary purpose of high school is still college preparation. And for that, students need cognitive skills like the ability to conduct research and analyze data. While they certainly need life skills, too, those are rarely at the forefront of the high school curriculum.
With the Every Student Succeeds Acts (ESSA), the latest iteration of the Elementary and Secondary Education Act (ESEA), states now have more control over their curriculum and testing standards. So more states could implement programs to help their students learn more about personal finance. But, again, my opinion is that this shouldn’t result in personal finance classes as a state-mandated graduation requirement.
Personal finance classes have bad track records
Interestingly, USA has reported in the past — before the article mentioned above — that personal finance classes in high school do more harm than good:
Nearly 17% of the seniors had taken a money management or personal finance class, down from 20% in 2004. Surprisingly, students who had taken a class actually fared worse than those who did not. Students, however, who had played a stock market game, in which they used play money to pick stocks, fared better than students who had not participated.
It’s possible that this statistic is a result of selection bias. The students who took the money management or personal finance class may have taken the class in order to opt out of higher-level math classes like calculus or geometry. If these students lacked more basic math skills, this could have affected their personal results from such a personal finance class.
For example, J.D. from Get Rich Slowly was bored in his required high school personal finance class:
I thought the class was lame. It wasn’t challenging. I never did any of my homework, and so earned an F on every assignment. But I always received the top score on every test. The teacher wanted to fail me, but his own grading system required that he pass me with a D.
J.D. performed poorly because the class failed to hold his interest, which meant he probably didn’t learn as much as he could have.
There is no room in the curriculum
If you want to add an additional mandatory class to the high school curriculum, you will either have to remove other subjects, give other subjects less time, or extend the school day or year. None of these options is satisfactory. What are you willing to give up?
Many public schools have warned that they have no room in the high school curriculum for mandatory money management classes. However, some of them do offer personal finance lessons incorporated in the classes in their “career and technical education” programs.
Maybe there’s a better place
In seventh grade, I was forced to participate in a class called “home economics” for part of the year. We learned life skills such as sewing pillows and making crêpes. Home economics would be the perfect class to spend about two weeks on the basic money management skills needed to get students started on the way towards fiscal maturity. In fact, a large part of running a home is managing its finances. This could be the perfect place!
In the end, though, teaching personal finance is the parents’ responsibility. If that’s not an option, life will eventually “happen” to the students and, as they grow up, they will learn from experience.
You can also check out some tips for parents from Golbguru and Liz Pulliam Weston. For more personal experiences with financial lessons in school and at home, read through the comments on the Get Rich Slowly post I mentioned above.
What are your thoughts? Should children learn more about personal finance at home or at school? Who is ultimately responsible for this aspect of their education?
Updated April 15, 2017 and originally published April 12, 2017.