Financial Literacy in High Schools: A Critical Need for the Future

Financial Literacy in High Schools is a topic of growing importance in our increasingly complex financial world. As young adults step into a life of financial independence, their ability to make informed decisions about savings, investments, loans, and more becomes critical.

Despite this, the incorporation of financial literacy into school curriculums is often insufficient or altogether lacking. This article explores the current state of financial literacy education in 2024, its importance, the challenges it faces, and the essential topics every young adult should understand to navigate the financial landscape effectively.”

This subject often receives less attention than traditional subjects like math or science. In fact, a study by the National Endowment for Financial Education found that only 24% of millennials demonstrate basic financial literacy. 

Do They Teach Financial Literacy in High School?

Yes, financial literacy is taught in some high schools, but not all. According to a CNBC report, the extent to which financial literacy is taught varies significantly from one school or district to another.

While some schools have robust programs, others might only touch on the subject in a broader economics or life skills class. Despite the importance of the subject, only 16.4% of U.S. students are required to take a personal finance class in schools, according to the Council for Economic Education.

How Many US States Require Financial Literacy in High School?

As of December 2023, according to Ramsey Solutions, 25 states require high school students to take a course in financial literacy to graduate. This is an increase from the 17 states that had such a requirement in 2018, but still far from the goal of national implementation.

The extent of the requirement varies among these states, with some mandating a stand-alone financial literacy course and others integrating the topic into other subjects.

What State has Curriculum in Financial Literacy?

One example of a state with a comprehensive financial literacy curriculum is Utah. They have a mandatory, stand-alone course for high school students that covers a range of topics including saving, investing, and managing credit.

A study by the Financial Industry Regulatory Authority found that students in states where financial education is mandatory, like Utah, have higher credit scores and lower rates of delinquency.

Why is Financial Literacy Not Taught in High School?

There are several reasons why financial literacy is not universally taught in high schools.

Firstly, there’s the issue of curriculum overcrowding. With so many subjects to cover, financial literacy often takes a back seat.

Secondly, there’s a lack of consensus on who should be responsible for teaching this subject – parents, schools, or both.

Lastly, financial education is not always seen as immediately relevant to students, which can lead to a lack of interest and engagement.

Are High School Teachers Qualified to Teach Financial Literacy?

This brings us to another crucial question: are our teachers equipped to teach this subject? According to a report by the Federal Deposit Insurance Corporation (FDIC), many teachers – nearly 55% – express discomfort with teaching financial literacy due to a lack of personal knowledge and confidence in the subject matter.

This is a significant barrier to providing effective financial education in schools, and it underscores the need for targeted teacher training and resources.

Why Finances Should Be Taught in Schools

As we navigate the complexities of the financial world in our daily lives, it becomes increasingly clear that financial literacy in high schools is not just a nice-to-have, but a must-have. Here’s why:

1. Preparation for Real World: High school students are on the brink of stepping into the real world, where they’ll have to make financial decisions that can impact their life significantly. Understanding finances early can help them navigate these choices confidently and effectively.
2. Prevention of Future Debt: With student loans, credit cards, and auto loans becoming a part of young adults’ lives earlier than ever, understanding the implications of debt and how to manage it is crucial. Financial literacy education in high schools can be the first step towards preventing debilitating debt.
3. Promotion of Healthy Financial Habits: Just like any other life skill, healthy financial habits such as saving, budgeting, and investing are better learned early. Schools have an opportunity to instill these habits in students, setting them up for a lifetime of financial success.
4. Understanding of Economic Influence: Our personal finances don’t exist in a vacuum. They are influenced by the broader economy. Understanding this interplay can help young adults make informed decisions that align with economic trends and realities.
5. Empowerment to Make Informed Decisions: Financial literacy equips students with the knowledge to understand and evaluate financial opportunities and risks. Whether it’s deciding on a college, buying a car, or investing in the stock market, financial literacy empowers young adults to make informed decisions.

Integrating financial literacy in high schools is an investment in our youth’s future. By providing students with these tools and knowledge, we can empower them to make wise financial decisions that will serve them well throughout their lives.

The ultimate goal should be to ensure that every high school graduate has a solid grasp of financial literacy fundamentals, ready to navigate the financial challenges and opportunities they’ll encounter in the world beyond the classroom.

Essential Financial Literacy Topics for High School Students and Young Adults

Given the complexity of the subject, it’s understandable why it is challenging to find the time, qualified teachers, and resources to ensure our high school students graduate and embark into the world with a thorough understanding of all the necessary financial topics.

To provide a roadmap for this essential education, here are 12 essential financial literacy topics every high school student or young adult should understand thoroughly:

1. Budgeting and Saving: This is the cornerstone of financial literacy. Understanding how to allocate income to different expenses, setting aside savings, and planning for unexpected costs are fundamental skills for financial stability.
2. Understanding Income and Paychecks: It’s crucial to understand the difference between gross income and net income, along with the various deductions that come out of a paycheck like taxes, Social Security, and possibly, contributions to a retirement plan.
3. Banking: Knowledge about how to open and manage a checking and savings account, the use of ATMs, online banking, and mobile payment apps are critical in today’s digital world.
4. Credit and Loans: Understanding the cost of borrowing, how interest rates work, and the impact of one’s credit score on the terms of a loan can help young adults make informed decisions about when and how to borrow.
5. Debt Management: Learning how to prioritize and manage debt repayment, the consequences of default, and strategies for avoiding or getting out of debt are essential for financial health.
6. Investing: Basics of investing such as understanding the stock market, bonds, mutual funds, and retirement accounts can help young adults grow their wealth over time.
7. Risk and Insurance: Understanding the purpose and value of insurance policies (including health, auto, and renters/homeowners insurance) can help protect against financial setbacks.
8. Taxes: Knowing how to file a basic tax return and understanding how earnings, deductions, and credits can affect one’s tax liability are key elements of financial literacy.
9. Economic Indicators: Grasping basic economic concepts such as inflation, interest rates, and economic growth can help young adults understand the larger economic forces that can affect their personal finances.
10. Financial Planning for College: Understanding the costs of higher education, options for financial aid, the implications of student loans, and strategies for saving for college can prevent unwelcome financial surprises.
11. Understanding Contracts: Whether it’s a lease agreement, a cellphone contract, or a job offer, knowing how to read and understand the fine print can save a lot of money and grief down the line.
12. Real Estate Basics: The process of buying or renting a home, understanding mortgages, and knowing the ongoing costs of homeownership are important aspects of financial literacy.

Each of these topics will provide high school students and young adults with a comprehensive foundation in financial literacy, equipping them with the knowledge to make informed decisions about their money in the future.

Money Knowledge Improves Lives!

The importance of financial literacy in our increasingly complex financial world cannot be overstated. While some progress has been made in introducing financial literacy into high school curriculums, there’s still a long way to go. The twelve essential topics listed above should serve as a guidepost for what a comprehensive financial literacy education might include.

The goal should be that every student graduates high school with a solid understanding of these topics, providing them with the skills they need to navigate their financial futures successfully. Here’s hoping the future sees financial literacy in high schools gain the attention it deserves.

Dear High School Teachers,