Curriculum Opinion

Financial Literacy Transforms Students’ Lives. Here’s Where to Start

By Annamaria Lusardi & Nan J. Morrison — July 25, 2019 5 min read
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Would a school allow athletes into a game without any practice? Send kids to their library or point them online but not help them learn to read? Should schools stop teaching math because some children find it hard or might fail? The notion, as advocated by some, that America should let students slide into adulthood without teaching basic personal finance concepts is equally shortsighted. As a researcher and a leader of a financial education organization, we could not disagree more. In fact, we experience every day the profound, lasting impact that financial education has on our nation’s young people.

One high school senior who recently completed classes in economics and personal finance told us that this practical curriculum was transformational: “At first, it felt like a foreign language. Now, I understand how to make more thoughtful decisions about my life. It’s a new way to think,” the student said. We’re thrilled the teacher was able to get the training necessary to master the subject and inspire kids in another avenue of knowledge.

Not every teacher, student, or school has that option.

They should.

Teachers, like many other Americans, need to build the competence and confidence to teach this subject.

The 12th grader’s observation puts a fine point on who needs financial education and how to deliver it. If we want to demystify the language of finance and build capability, we must ensure that every child has access to quality financial education. That happens best in the classroom when personal finance is treated like any other subject. Ideally, these essential life lessons should be integrated into the K-12 curriculum—a bit each year, culminating in a full semester class. In a standard math education, for instance, we teach kids to count in kindergarten so they build readiness for algebra years later. Personal finance education should be treated similarly.

In 2013, the Council for Economic Education (CEE) released a set of rigorous national standards for financial literacy that offer a starting point for elementary, middle, and high school educators to create a meaningful curriculum with the flexibility to determine what works best in their own school day. Schools should also tailor their curriculum to account for cultural differences in the classroom, as well as the specific learning styles of girls versus boys.

As with any subject, financial education curriculum is most effective when teachers are comfortable with the content. And kids aren’t alone in being mystified, uninformed, or even afraid of the language of personal finance. Teachers, like many other Americans, need to build the competence and confidence to teach this subject. In a new study from the Global Financial Literacy Excellence Center (GFLEC), 90 percent of the nearly 800 teachers surveyed believe personal finance should be taught in schools, but only 50 percent of those currently teaching it say they have a good understanding of the subject. There are resources available to close this gap. Both of our organizations, CEE and GFLEC, offer free teacher training and resources in person and online to help teachers who can then help students master personal finance, for instance.

Not surprisingly, strong curriculum and trained educators are just parts of the puzzle.

Establishing financial education in an amenable school or a district with interested teachers or parents can be relatively straightforward. Providing equal opportunity for all requires a heavier lift. Only 22 states require all students to take an economics course in high school. Absent a commitment by school boards, state education officials, and legislatures, it can take concerted efforts of parents, the private and nonprofit sectors, and sometimes even students themselves to create the opportunity for kids to learn these essential life skills. Whether getting it done top-down through legislation or driving from the ground up, it requires collaboration across many constituents.

Adding personal finance coursework need not be as costly as, say, adding a new science or arts program, but funding can be a roadblock to adding curriculum. It does not necessarily require additional staff or new, weighty texts. Personal finance can be taught in existing classes when adding courses or teachers is impractical or impossible. We know, though, that nothing in a school is totally free.

However, one of the very lessons that students learn in finance education class applies: It takes investment to grow.

We know these investments in financial education pay off.

Three years after Georgia, Idaho, and Texas mandated personal finance courses, credit scores for young adults increased up to 32 points, and loan delinquency rates decreased by as much as 16 percent. The data clearly indicate that we are not wasting time and money to ask states and high schools to provide personal finance to their students.

A basic knowledge of finance is just as important to today’s youths as reading and math, particularly in today’s global economy. Yet in the 2015 PISA financial-literacy assessment, American 15-year-olds ranked in the middle of the pack, just ahead of Poland. Only about 10 percent of U.S. students were top performers on the assessment. Students in the United States must not be left behind.

Perhaps the most important reason to incorporate financial education in schools is that it levels the playing field. The data on financial literacy from the international assessment and other surveys show that college educated males from wealthy families do just fine without personal finance in the classroom, furthering the gap for young people born without these advantages. A 2010 study showed how stark that gap really is, finding that a college‐educated man whose parents had stocks and retirement savings was roughly 45 percentage points more likely to know about risk diversification than a woman who hadn’t graduated high school and whose parents were not wealthy. Prioritizing financial education in school is an essential tool for economic mobility.

A solid financial education has affected the lives of so many students who need this knowledge and may not have access to it at home. Financial education provides the tools and skills for our students to make informed decisions which benefit themselves, their families and their communities. It’s time and money well spent.


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