Should a Personal Finance Education Be Offered in High School?

by Millie Kay G. on 2011-10-2817

I was surprised to find out that there is actually a debate that surrounds the question about adding personal finance as a subject or a curriculum in high schools. I would have expected that this notion would meet with rousing support. But as it stands, one side of the finance in schools debate argues that teaching children about money should remain solely within the family. In the past, a child’s first introduction to money concepts may have come in the form of a weekly allowance. Or maybe you know children who fed piggy banks when they received birthday or holiday money from relatives and friends. Other basics introduced by parents may include the idea of charitable giving and planning ahead for gift giving.


I would think that it would be hard to argue against finance in schools in light of the recent problems in the economy and the housing market. Many children are learning firsthand about home foreclosures and the impact of job losses (some of them need only to look around their neighborhood for these signs). By going beyond the basics of financial literacy, it may be possible to provide students with the economic skills they need to navigate the workforce and establish themselves as they grow older. It’s assuring to hear about those U.S. states that believe in the importance of finance in schools and which have taken steps to implement a financial curriculum.

Financial Education In Our High Schools

Let’s look at what is going on in various American school districts with regards to this matter. Where does your state stand on this matter?

Virginia. When the state of Virginia moved to require financial literacy for its high school students, it was met with some resistance. Some felt that the material could be adequately covered in math and civics courses, while local school boards didn’t appreciate being told what to teach by the state. At this time though, Virginia does have a curriculum for middle and high school students that covers topics like opening an account at a financial institution, balancing a checkbook and filling out a loan application. Additional topics include consumer rights and responsibilities, debt management and understanding contracts.

Pennsylvania. One high school is adding a course, but doesn’t have the funding to hire more staff.

Maryland. Several years ago, a Maryland school board president expressed concern that a single course wouldn’t be enough to fully educate students about financial matters. He also pointed out that the course is relatively expensive at $600,000 — and he feared it wouldn’t be effective.

Missouri. Students in Missouri can take a personal finance class in the tenth, eleventh or twelfth grades. They study budgeting, banking services, and saving and investing. Other themes include credit and consumer skills. Also, goals and decision making as well as career planning are covered.

Wisconsin. The Wisconsin Policy Research Institute is worried that the state’s lack of a requirement for economics and personal finance classes and inadequate number of trained teachers for the subjects will be detrimental to the residents and to Wisconsin’s overall economy.

Tennessee. Students here are expected to learn about money management, income, saving and investing, and credit and spending.

Utah. Utah teaches its students about basic budgeting, investments and even bankruptcy education.

Illinois. This state requires a consumer education course of 50 minutes a day for nine weeks for its high schools. The students are taught about credit scoring, income taxes and the role of consumers.

Georgia. They have an economics course that incorporates personal finance into one of its themes.

The good news is that personal finance topics are added to other subjects like economics, math or social studies in quite a number of states, from Arizona all the way to West Virginia. Personal finance may be taught as electives in other states. I am sure that there are independent school districts and private schools that handle this subject on their own.

The teaching of finance in schools is starting to emerge across the nation. According to Jump$tart.org, Virginia, Missouri, Tennessee and Utah actually require students to take at least a semester of personal finance.

I live in an Oklahoma school district that has implemented a semester of financial literacy in the eighth grade. This class goes over how to maintain bank accounts, among other topics. Over at the local high school, the ninth graders recently listened to a guest speaker about retirement funding. Since these students are likely to take on part-time jobs within the next year, giving them an introduction to finance in school may help them handle their paychecks with care.

personal finance education

A Sample Personal Finance Curriculum

Financial courses give students the chance to learn about what to do with their first paychecks, how to develop spending plans and how to build marketable skills. Such a course doesn’t need to eat up an entire semester, either. One college senior recounted how relevant her personal finance class became after just five weeks (source: USA Today College).

I thought to put together a sample financial curriculum for students culled from a variety of resources. As students move into higher grade levels, it becomes possible to introduce financial topics of increased complexity. Ideally, by the late high school years, students should be amply prepared to understand their college financing options, set savings goals and anticipate credit card management. Almost two-thirds of college students need to take out student loans, according to FinAid. College-age students should be prepared to handle their student loans and receive guidance about employer-sponsored savings plans like the 401(k).

Grade Level Sample Topics
First Grade Counting Change & Currency
Second & Third Grades Paying for Purchases & Gifts
Third & Fourth Grades Introduction to Saving & Compound Interest; Setting Financial Goals; Allowances
Fifth & Sixth Grades Introduction to Banking Services; The Lemonade Stand & Entrepreneurship
Seventh & Eighth Grades Managing Checking Accounts; Minimizing Bank Fees & Overdrafts
Ninth & Tenth Grades Careers & Income; Budgeting; Planning for College Expenses
Eleventh & Twelfth Grades Credit Cards & Loans; Insurance; Investments; Implementing Personal Finance Tools Like Mint, Quicken or Spreadsheets
College Managing Student Loan Debt; Good Practices for Credit Card Debt; Investments; Purchasing a Home; Filing an Income Tax Form; Employer-sponsored Savings Plans

In high school, many teens start working and earning substantial paychecks for the first time. I’d argue that this would be an ideal time to introduce them to the expenses that are associated with living on their own, the impact of credit cards on their budgets and to saving for longer term goals. At this point, issues like the $5 debit card fee may be enlightening to them.

If my local school board hadn’t already set up a financial literacy class, I suspect parents and community leaders might have suggested it eventually. That’s because a financially confident individual can contribute to his or her community by staying in the workforce and by being productive. Imagine if we could all become responsible home owners who are able to make purchases that motivate area businesses to continue to operate — there’s a lot we would be able to control better: high crime rates, blighted cities and towns, heavy dependence on government services and welfare. There is no debate that a lack of money management skills can derail ambitions.

The bottom line is: it doesn’t seem difficult to share the basics of personal finance with our kids. The piggy bank is just a starting point. Beyond that, there’s a lot more that can be learned. A lot of our financial problems as a nation are traceable to consumer debt and money management. Wouldn’t it be great if future generations can stave off financial catastrophes (and do a better job than we’ve done)?

Created April 18, 2007. Updated October 28, 2011. Copyright © 2011 The Digerati Life. All Rights Reserved.

{ 17 comments… read them below or add one }

Flexo April 18, 2007 at 8:31 am

Agreed. It’s a fiery debate.

Silicon Valley Blogger April 19, 2007 at 6:07 pm

Many financial writers and bloggers have touched on the question of whether high schools should require money management classes. I believe there’s a time and place for learning personal finance as formal subject matter. I strongly believe that money management is something a student should be exposed to prior to becoming a credit card carrying member of the work force. The question is when should this exposure take place? While some bloggers suggest somewhere around 7th grade, I would lean more towards a gradual orientation, beginning in early primary school. A good debate rages on in some areas of the blogosphere.

To get a feel for the type of questions administered to students, you can try this personal finance quiz: the JumpStart Coalition for Personal Financial Literacy 2006 survey. According to Bankrate, more than 5,000 high school seniors from 37 states took the survey to test their knowledge on various financial topics including insurance, investing, debt and saving and incurred an average score of 52.4 percent. Though this quiz has been offered in the past, results haven’t been much different this time around.

I took the test myself and thought that there were a few questions there tricky enough to stump the average person, what more a student. In fact, if they tried this test, I’ll wager that most of the people I see everyday won’t get a perfect score and some will probably flunk it outright, scoring lower than what high school students have done.

So how well did you do? I maintain that I and most folks I know never got the type of education to pass such tests with ease. We need that finance curriculum in schools somehow.

Super Saver April 20, 2007 at 8:23 pm

SVB,

Thanks for the link to the quiz. Although rusty, I must be still a good multiple choice test taker. Scored a 100 on the first try. Hope there is some correlation to future wealth :-)

Silicon Valley Blogger April 21, 2007 at 11:27 am

Good for you Super Saver. I need a bit more practice and review… ;)

Art Education June 3, 2008 at 4:51 pm

This is a briiant idea.

My parents were bad with money, so they did not teach me anything about it.

Nothing was taught in school.

As a result i had no idea how credit worked and about credit reports.

My credit was ruined before age 19, i missed out on the 2000 real estate boom in California a result.

Financial education is definately a must, if all it does is help elimiate some people from teh shackles of comsumer debt before they get into it in the first place it will be well worth it,

Ake July 1, 2010 at 7:45 pm

This is a brilliant idea. I agree that financial education should be better supported.

Money Quiz April 16, 2011 at 6:30 am

You can find personal finance literacy quizzes for high school students here: money-quiz.com/hs/high-school.html

PKamp3 October 29, 2011 at 7:21 am

Pretty hefty course list – but any of those classes would likely be an improvement on our current situation!

When I started my first internship, I had no idea what a 401(k) was. My father advised me to contribute to the S&P fund and if I was interested I could dig into it in deeper detail. He was right (I was interested) and here we are today.

I was lucky. There are plenty of people who think a Home Equity LOC (even post-bubble) is a good replacement for a 401(k). Sure, it would eat into the PF blogosphere, but financial education would be a great thing in school.

Silicon Valley Blogger October 29, 2011 at 9:27 am

I also didn’t really begin to understand many aspects of finance until my early 20s, and only after my mom handed me a general PF book by Jane Bryant Quinn. I think it’s fairly straightforward to “get educated about finance”, but a lot of it is also psychology and how our behavior and attitude about money play into the picture.

I think that’s why personal finance (PF) blogging is a popular pastime: there’s something to be said about how others — even those in an online community — can motivate you to go down a particular path; there’s accountability, encouragement and even consensus in a PF blogging community that may influence your actions (with regards to how you believe or deal with your money) and such a platform may go beyond providing you with information or helping you learn a few things. In a way, this is why some of us may find more value in learning about financial concepts in a group setting vs DIY. Part of the learning process also involves sharing experiences and seeing how others tackle certain situations. I think that while learning finance in a vacuum is doable, there’s more value added when it’s done in a social setting (e.g. in a classroom).

When we learn, we start with the information. The next step is to act on that information. By starting early (with kids), there’s more time there to help develop good habits (which may take time to seed) and maybe, even to shape behavior.

Her Every Cent Counts October 29, 2011 at 11:17 am

This topic is tough to teach in schools because when it comes down to it there is such vast inequality regarding student’s family income levels, that it’s hard to discuss money matters without discussing this inequality.

I’m all for teaching the basics of compound interest and growing your net worth in school, but I don’t know if I would have appreciated the lesson at the time. We did have a health class where we spent a day or two talking about balancing your checkbook, but at the time that just didn’t apply to me, so I didn’t pay a lot of attention.

It would be good to use some scare tactics like they do in sex ed to educate students on good debt vs bad debt, and how much they’ll really earn when they get out of school, and the difference in salary and lifestyle between becoming a business manager vs working for a non profit.

Douglas W. Green, EdD October 30, 2011 at 4:52 am

This would be good content for an online mini course. I see no need to wedge it somewhere else. Most people who want to add a course want to jam it into a semester no matter how much or how little content there is. Would you rather have your child take an online course in Photoshop or have the art department come up with a semester or full year course, which some schools actually do. Great post. Keep up the good work.

Funny about Money October 30, 2011 at 7:43 am

Given how ignorant students are when they exit high school, what reason do we have to expect that financial literacy courses will do any more good than any other efforts?

I have had college students who believe Wisconsin is a Rocky Mountain State, who tell me Arizona is a Great Plans (sic) State, who think World War I happened during the 19th century, who cannot read a paragraph (much less write one), who believe all essays must have either three paragraphs or five paragraphs, who cannot do the most basic arithmetic, who do not know what the germ theory is, who never heard of the Occupy Wall Street movement …oh, one could go on and on.

Sorry, but IMHO the first priority has got to be to bring schools back, somehow, to teaching students how to read, how to write, and something about the history and current events of the world in which they live.

The darkness to which we consign our young people is going to be the doom of this country. Matter of fact, it probably already is the doom of this country.

Glenn G. Millar October 30, 2011 at 10:41 am

It has always amazed me that we teach Algebra in High School, yet not classes on personal financial management. Not that I have anything against Algebra, and I am sure it’s a basis for learning. However, less than 5% of us will ever use Algebra in our lives and yet every single one of us will have to manage our own finances. This goes for parenting classes as well, which 95% of us will need someday, but that’s a completely different rant.

krantcents October 30, 2011 at 5:34 pm

For in excess of 8 years, I taught a financial literacy class in high school. I taught it at Title 1 high school. These students are considered “at risk” students and come from low socio-economic households. The class was a lot of hands on work to tech them about bank accounts, budgeting, mortgages, credit cards, goals, goal setting, saving and investing, buying a car or home and living on your own. One class will not change people, they need to practice what they learned and parent support and modeling is very important.

Kyle Ambrosas October 31, 2011 at 2:37 pm

Education for financial practices is definitely important, though I would hope most parents would provide this for their kids. If not, I feel that they are neglecting part of their parental duty. That being said, there may still be a place for teaching everyone some basic things.

Donna Freedman November 4, 2011 at 3:20 am

Isn’t one of the three Rs “‘rithmetic”? Personal finance has a lot to do with that. Lessons on compound interest, checkbook balancing (yep, I’m a dinosaur), figuring percentages of a stock’s growth and how big the dividend will be, exercises such as “How much will it cost if someone puts an item on layaway or charges it at X% interest vs. saving up and buying it with cash?” — all of them stretch the brain math-wise but could also encompass other aspects of personal finance, such as the wisdom of getting a roommate in an expensive city or the mechanism by which loans can be consolidated.
For one of my MSN Money columns (the unbanked) I interviewed a young woman who, when she got her first paycheck, went straight to the check-cashing place. No one in her family had a bank account. No one in her neighborhood had a bank account. She figured the check-cashing fee was just a fact of life. That is, until she was persuaded to join a program that a local credit union set up at her high school. She got heavily involved in the club and, more to the point, opened an account. When I talked with her she was a junior in college (first one in her family to go, mostly on scholarship), had learned to budget and was keeping to it despite working and being in school, and was looking seriously at retirement plans.
A whole lot of people are being shortchanged because their parents don’t know what they don’t know or have awful money skills. I think that just as gym class has shifted to be “lifelong health” vs. volleyball or archery, we should be offering “lifelong wealth” classes — because basic money management skills are the key to prosperity. Why PE but not PF?

yu men January 4, 2012 at 2:26 pm

Insightful piece. I think that life money lessons are a necessary skill for people to have. In particular, lessons about how to save, pay debts, and use disposable income wisely are important. Some people think that you can merely forget a debt to your creditors, which will cause serious problems (as you probably know).

I don’t think college-age students understand the importance of fiscal management. With so many students going to college, that is the time to learn.

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