Why Should Personal Finance Be Required in High School?
High school students often wonder about the relevancy of certain courses they must take. In particular, they often question, “Why should personal finance be required in high school?” Even a cursory glance at the statistics will remove all doubt about the importance of learning personal finance before dealing with money. Instead of asking, “Why should personal finance be required in high school”, we should be focusing on how to implement quality educational programs in high school that teach the necessary skills of personal finance. The necessity of pre-adult personal finance education is obvious. Now let’s put our attention on implementing these critical educational programs. Review these personal finance quotes:
Many Reasons to Require Personal Finance in High School
Financial educators are often asked the questions, “Why should personal finance be required in high school and why it personal finance important?” They would be wise to cite studies revealing a link between early personal finance education and strong financial habits that remain with students for the rest of their lives. These studies provide an answer to the question, “Why should personal finance be required in high school?” Imbuing students with the financial knowledge they need to succeed before they even enter the workforce or college sets them up for success. Whether working a job or attending university, students will be able to contribute a portion of their paycheck to their retirement account or handle their student debt in a prudent manner.
High School Personal Finance Requirement Makes a Difference
A team of researchers surveyed students at 15 geographically diverse colleges to assess financial knowledge and behavior. Student responses were organized into 1 of 6 categories based on the type of financial education policy a student’s home state had for high school. The categories ranged from a state with no standards at all to states that required a financial literacy course and assessment in high school.
Students whose home states required financial education courses were found to be more likely to save, less likely to make late credit card payments, and more likely to take on a healthy amount of financial risk. While 1.3% of those with no state standards ‘maxed out’ their credit cards, only 0.7% of those with a required course and corresponding assessment ‘maxed out’ their credit cards. When asked if used a budget, 46.7% of those with no state standards replied yes while 52.9% of those with a course and assessment replied yes (National Endowment for Financial Education). https://www.nefe.org/Portals/0/
WhatWeProvide/PrimaryResearch/PDF/Gutter_FinMgtPracticesof
CollegeStudents_Final.pdf
Students who underwent the Moneytalks educational curriculum demonstrated positive behavioral changes. A ‘saving scale’ constructed by the author was the composite of a series of questions asking students about their savings habits. The mean value of the savings scale rose from a mean of 24.28 to 26,78, which was deemed statistically significant. Furthermore, statistically significant differences were noted for the proportion of kids who would compare price and buy on sale (University of California Agriculture and Natural Resources). http://ucanr.edu/
57% of millennials have either an advisor or robo advisor (Money Confident Kids). http://www.moneyconfidentkids.com/content/dam/money-confident-kids/PDFs/PKM-Surveys/2017_PKM_Results.pdf
Parents Should Model Good Personal Finance Habits Before High School
Only 23% of kids surveyed indicated that they talk to their parents frequently about money (Money Confident Kids). http://www.moneyconfidentkids.com/content/dam/money-confident-kids/PDFs/PKM-Surveys/2017_PKM_Results.pdf
A research study analyzing the effects of parents’ values on children found a statistically significant positive association between parent’s savings rates and children’s savings rates (University of Agder). https://home.uia.no/ellenkn/WebleyNyhus2006.pdf
18% of adults cited retiring without having enough money set aside as their top personal finance worry (National Foundation for Credit Counseling).
https://www.nfcc.org/wp-content/uploads/2017/03/NFCC_BECU_2017-FLS_datasheet-with-key-findings.pdf
Obvious Need for Personal Financial Education in High School
Only one in five (19%) say they are not knowledgeable about annuity products in retirement (1 or 2 on a 7-point scale), suggesting many overestimate their knowledge of annuities (The American College). http://retirement.theamericancollege.edu/sites/retirement/files/2017_Retirement_Income_Literacy_Report.pdf
37% of recent college graduates have been late with a student loan payment at least once in the past year (Financial Industry Regulatory Authority). http://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf
58% of 18-26 year olds set aside a portion of their income as savings (Bank of America). https://about.bankofamerica.com/assets/pdf/BOA_BMH_2016-REPORT-v5.pdf
“We need to have financial literacy in America, not just complaining about obstructionism. We need solutions.” – Kabir Sehgal, bestselling author of 8 books
“Being promoted to a top position in your organization, or even being elected to public office, does not suddenly endow you with financial literacy, if you did not acquire and develop it, earlier in your life.” – Strive Masiyiwa, founder of Econet Wireless
“I want kids to understand the importance of savings and investing. It’s crucial that people understand the importance of financial literacy, because it’s actually life-saving.” – Mellody Hobson, President of Ariel Investments
Recipe for Effective High School Personal Finance Requirement
A prerequisite to financial well-being is a thorough knowledge of personal finance matters. Such knowledge can be gained through the participation in a well-designed personal finance curriculum that adequately covers all topics needed. The impact of financial quality literacy initiatives is evidenced by the numerous papers demonstrating reduced defaults on debt, higher rates of saving, and other financial habits conducive to financial well-being. A look at best practices and statistics can inform educators on the financial needs of their target audiences and the best methodologies to educate that audience.
The OECD emphasizes an excellent program should be actively promoted as early as possible in participants’ lives and assessments should be taken at regular intervals to determine the efficacy of the program (Organization for Economic Cooperation and Development). http://www.oecd.org/daf/fin/financial-education/OECD-INFE-Principles-National-Strategies-Financial-Education.pdf
The Canadian Task Force for Financial Literacy recommends a single, easily navigable website that hosts all unbiased information. Furthermore, programs should initiate public awareness programs, along with recognizing the benefit of competitions and rewards in galvanizing individuals to learn (Government of Canada). http://publications.gc.ca
Awareness Will Bring Personal Finance Requirement to High School
Why should personal finance be required in high school? We know there are many benefits of a personal finance education, but what are the necessary steps to implement personal finance courses into the high school curriculum? Only by bringing it to the attention of policy makers and elected officials can any real change take place. When we ask, “Why should personal finance be required in high school”, we also need to clearly define personal finance and consider how to implement such policies. Working together as a community, concerned citizens and financial advocacy organizations are a powerful force that have the actual ability to influence change at the high school level.