Beginning this year, Illinois schools are required to teach financial literacy to students in first through 12th grade.
The state’s new personal finance standards are based on the Council for Economic Education’s National Standards for Financial Literacy. A task force made up of classroom teachers and groups like Econ Illinois, which provides training on how to teach money concepts, revised the social science standards to include financial literacy benchmarks for the first time. Illinois State Board of Education (ISBE) unanimously adopted the new standards in June 2015, and the state approved them in February 2016.
Illinois is one of 45 states to factor financial literacy into its standards. The thinking behind the effort: students need practice making decisions about spending, saving, budgeting, and investing.
At a conference promoting the new standards, state Treasurer Michael Frerichs stressed the importance of teaching students how to make smart financial choices. “As Illinois faces unprecedented fiscal challenges, it’s even more important than ever that our children are exposed to successful ways to manage and invest their finances,” he said.
The lessons, advocates of financial literacy education say, are especially needed in a state where 31.9 percent of households are “liquid assets poor,” meaning they do not have enough savings to live above the poverty level for three months if they lose a job or are hit by a medical crisis. Building up a little savings isn’t just difficult for Illinois residents; nearly half the country, 44 percent, lack the funds to get by for three months if their wages were suddenly cut off.
Need further proof that U.S. students could stand some boning up on money matters? On the latest Program for International Student Assessment (PISA), American 15-year-olds performed below students from Australia, Belgium, Canada, China, the Netherlands, and Russia on questions of basic personal finance, such as identifying the purpose of an invoice or finding the net salary on a pay slip. A 2015 study of financial literacy requirements by Champlain College gave states mostly B’s and C’s for their efforts. Illinois received a B.
Illinois is one of 37 states to require that financial literacy standards be taught. More than half of these 37 states, like Illinois, require financial literacy education but do not require a specific course on financial literacy that must be taken to graduate. This results in greater flexibility in how the standards are taught. What’s more, Illinois is in the majority of states that do not have any statewide standardized test to assess learning—only 7 states did so in Council for Economic Education’s 2016 Survey of the States.
“I have often heard it said, ‘If it’s not tested it’s not taught,’” Christopher Caltabiano, chief program officer at the Council for Economic Education, wrote in an email. He said the Council advocates for standardized testing as way of discerning “whether students are in fact learning what the standards require that they be taught, whether there are inconsistencies in performance (and whether these inconsistencies can be tied to anything in particular such as the teacher’s level of training or variability in the resources used), and frankly, whether schools are actually implementing the state requirements at all.”
Illinois’ financial literacy standards begin in first grade where students learn that people work in exchange for pay. But even kindergarteners are getting a taste of fiscal responsibility. Under the economics standards, kindergarteners learn the concept of scarcity, so that they begin to understand we cannot have everything we want. By fifth grade, students begin to learn that interest is the price one pays for borrowing money.
Middle and high schoolers get more sophisticated lessons on how to evaluate the costs and benefits of taking out insurance or paying with credit, as well as the risks and rates of return on diversified investments.
Explore the 20 economics concepts ranging from scarcity to supply and demand to taxes considered crucial for students to understand by the time they graduate high school. How well do you understand these concepts? You can test your financial literacy chops with this quiz from the Council for Economic Education.
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A version of this news article first appeared in the Curriculum Matters blog.