Personal Finance Should Be Taught in High School

President Obama, watching over years of personal finance deterioration due to Americans largely not understanding how to manage their finances, has declared April Financial Literacy Month.

Americans’ ability to build a secure future for themselves and their families requires the navigation of an increasingly complex financial system.¬† As we recover from the worst economic crisis in generations, it is more important than ever to be knowledgeable about the consequences of our financial decisions.¬† During National Financial Literacy Month, we recommit to improving financial literacy and ensuring all Americans have access to trustworthy financial services and products. — President Obama

It’s all well and good that Obama has declared April Financial Literacy Month, but that isn’t going to go a long way in educating teens and 20 somethings about how to mange their money. Thank goodness for the Internet, and personal finance bloggers. While news articles on retirement investing are generally targeted at 40-60 somethings, the news content on the web teaching about personal finance to those of us in our 20s in slim. Without the personal finance blogs I found in my early 20s, I would have never opened up a Roth IRA, a separate investing account, or bothered to explore my investment options outside of CDs. Retirement hadn’t even crossed my mind.

For others who aren’t fortunate enough to run across a personal finance blog written by someone their own age, learning about personal finance, especially retirement savings, and the notion that debt is BAD, often comes too late.

I’ve often wondered why in school they force us to take health classes, and even family planning classes, but nothing around personal finance — the most important “health” issue of all.

Some schools are starting to figure out that personal finance is a subject that sorely needs to be taught to teens. In Sacramento’s Burbank High, students in an economics class are being treated to a series of talks called “budget busters” about money management, courtesy of Sacramento CPA Bruce Kajiwara. The Sacramento Bee notes that for many Burbank High students, the topic is an eye-opener. In a south Sacramento school where 85 percent of students qualify for federal free lunches based on poverty-level incomes, learning financial skills at home isn’t always possible.

Only 13 states require at least one semester of personal finance instruction, according to a 2009 study by the national Council for Economic Education (see the requirements in your state.) In most states, including California, teaching personal money management is voluntary. Only four states — Virgina, Tennessee, Utah and Missouri¬† require one semester of personal finance education.

2006 TN SB3741/HB3753 – 6/2/2006 Signed by Governor Tennessee Code Annotated, Section 49-6-1205 – This bill requires a program of instruction on financial literacy within courses currently offered in public high schools. to include, among other things, instructions on balancing a checkbook, completing a loan application, managing debt, savings, and investing. This bill requires the department to incorporate the elements of the financial literacy program into high school learning standards. AMENDMENT #1 requires that the program of instruction for the public high schools on the essentials of the free enterprise system include elements of personal finance and financial literacy that, as a minimum, would include instruction on earning an income, money management, spending and credit, and saving and investing. Specifies that successful participation in a 1/2-unit course on personal finance makes the student eligible for the 1/2-unit of credit for instruction on the essentials of the free-enterprise system.

It’s time other states incorporate personal finance education into their curriculum. This is a problem — 45 percent of graduating high school seniors said they were not ready to manage their money, according to a June 2010 Capital One study. The Jump$tart Coalition in Washington, DC, seeks to change that. They have a “Reality Check” quiz on their website that asks the questions all teenagers need to think about… What Kind of Lifestyle do you want?

Go ahead and fill out the survey (note… this isn’t adjusted for cost of living in specific locations, so I’m not sure how much they are assuming a 1 bedroom costs to rent a month) as you think you would have answered back when you were in high school. Would the results have shocked you then?

 

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One comment

  1. I completely agree with you! I've been on a rampage lately about this very topic. It amazes and disappoints me that finance is not taught in schools. It's obvious that it's not being taught at home either and it is essential to have good money skills so you don't end up in debt like most of society. I'm a firm believer that students need this type of education. What good are we doing them sending kids out into the world not knowing how to balance a checkbook or how the basics of credit work? This is the real life stuff that we should be teaching them. Okay, rant over. Good post!

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