Should High Schools Require Money Management Classes?
A serious question has recently come into the spotlight. Should high schools require money management classes? Glancing over the recent research gives a clear answer. Consider that money management is a foundational skill for a financially secure life. Consider that debt tends to feed on itself and can quickly grow out of control when not properly managed. Consider that, without education in personal finance, poor money management skills can be passed on through generations. Consider that, when people learn about prudent money management before they need to use it, they are less likely to become financially buried. Should high schools require money management classes? Absolutely.
Money Management Classes Are an Essential Building Block
After learning about the benefits of personal finance, many concerned individuals wonder, “Should high schools require money management classes?” Teaching money management to students provides an essential building block towards creating a financially stable future, and it is prudent to build such skills starting in high school. When asking, “Should high schools require money management classes”, it is wise to keep in mind that a lack of early money management education leads to decreased rates of participation in the stock market and decreased ability to grow personal assets.
Money Management Curriculum for Young Adults Change Lives
The Federal Deposit Corporation (FDIC) analyzed the intermediate-term impact of a financial literacy program on consumers’ behavior and confidence 6 – 12 months after the end of the program. They found that consumers were more likely to have a checking account, budget wisely, save for retirement, and more. After the program, 78% of respondents reported they had a checking account, up from 12% before they had undergone the program. Another 69% reported their level of savings had increased after taking the program, with only 3% reporting that it had declined (Federal Deposit Insurance Corporation). https://www.fdic.gov/consumers/consumer/moneysmart/pubs/ms070424.pdf
Attending a employer-sponsored retirement seminar saw net worth increase by nearly 27% for those who were in the lowest income bracket and had not received a high school diploma (Dartmouth). http://www.dartmouth.edu.
46% of those with low financial literacy index scores reported learning from personal experience, while 73% of those with high literacy scores claimed to learn from personal experience (Federal Reserve). https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf
An additional year of schooling increases the probability of having an investment income by 4.4% for whites and 1.7% for blacks (Harvard Business School). http://www.people.hbs.edu/scole/webfiles/cole-shastry-smarts%20HBS%20working%20paper.pdf
Young Adults Should Learn Money Management Skills Before They Need Them
Pregnant or parenting teens are more concerned about learning to save for a home in the future than learning how to save for college (Youth.gov). https://youth.gov/youth-topics/financial-capability-literacy/facts#_ftn8
46 percent of respondents said they either could not cover an emergency expense of $400 or would cover it by selling something or borrowing money (Consumer Financial Protection Bureau). https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/102016_cfpb_FinancialLiteracyReport.pdf
More than 20% of renters aged 18-24 overspent their income by $100 per month (Time). http://business.time.com/2013/01/17/todays-young-adults-will-never-pay-off-their-credit-card-debts
26% of adults admit to not paying their bills on time (National Foundation of Credit Counseling). https://www.nfcc.org/NewsRoom/FinancialLiteracy/files2013/NFCC_NBPCA_2013%20FinancialLiteracy_survey_
datasheet_key%20findings_032913.pdf
44% of Americans aged 22-26 do their own taxes (Bank of America). https://about.bankofamerica.com/assets/pdf/BOA_BMH_2016-REPORT-v5.pdf
Effective Money Management High School Courses
Financially illiterate individuals are predisposed to making poor financial choices that will engender a misalignment between their actions and their financial goals. Such an incongruity can be amended through the administration of a money management training for young adults that will educate learners on the consequences of their actions and steps on how to supplant those poor financial habits with more sustainable choices. A program that is capable of inducing such change among learners will follow industry definitions of money management and delivery best practices, some of which are outlined below.
The GAO stress that partnerships are a valuable way to acquire more resources and facilitate the execution of the program (Government Accountability Office).
https://digital.library.unt.edu/ark:/67531/metadc296866/m2/1/high_res_d/320216.pdf
Christine Lagarde, managing director of the International Monetary Fund, makes the case for an expanded government role in financial literacy and the passage of legislation to help form a financial competent populace. Programs should get the legislative backing they need in order to be successful and have the largest reach possible (International Monetary Fund).
https://www.imf.org
Experts Voice the Necessity of Early Money Management Skills
“I think people don’t understand compound interest because typically no one ever explains it to them and the level of financial literacy in the US is very low.” – James Surowiecki, journalist at The New Yorker and author of “The Financial Page” column
“It’s pretty much how we get anything added to the curriculum. When parents said children needed to be computer literate, the schools started responding. The same thing is true of basic financial literacy.” – Elizabeth Warren, United States Senator
“Financial literacy is not an end in itself, but a step-by-step process. It begins in childhood and continues throughout a person’s life all the way to retirement. Instilling the financial-literacy message in children is especially important, because they will carry it for the rest of their lives.” – George Karl, former NBA coach
All High Schools Must Require Money Management Courses
So, should high schools require money management classes? The answer to why money management should be taught in schools is clear once you consider that early lessons in money management are linked to improved financial outcomes throughout life. Being cognizant about the role of emotions and human biases in the investment process allows students to keep a clear head and discern prudent investing decisions from poorer choices. Should high schools require money management classes? A definitive yes.