Academics and experts agree: A solid financial education provides important tools for successfully navigating the sometimes-complex matters that we all face in adulthood. But are young people gaining the knowledge that can help them make critical financial decisions? While much academic time is focused on reading, writing and arithmetic, are students also learning about the fundamentals of personal finance and basic economics?
The answer seems to be a resounding “no” across much of the United States. As of February 2020, only 21 states required a high school course in personal finance and only half required a course in economics, according to the national Council for Economic Education.1 In states without requirements, few students have access to any financial education, so they potentially become adults without learning the financial skills that matter the most, according to the Council.
While financial matters should be discussed with children at an early age, several major groups believe the teenage years represent an ideal time for instilling most financial skills. Teen years are often when someone starts a first job and may show more interest in becoming financially independent. In their teen years, most Americans begin facing added costs related to driving, social events and major purchases. Once they reach their sophomore and junior years in high school, teens also begin considering longer-term plans and financial decisions that may include college and career choices.
A Harris Poll survey may be indicative of what can happen for those who do not receive an adequate financial education by the time they reach adulthood. In early 2020, 13 percent of more than 2,000 respondents said they were not sure they understood their own personal money situations. That number has been increasing in recent years, up from 12% last year, 10% in 2018 and 8% in 2017.2 The pandemic, and destabilization of the U.S. economy, has brought added financial stress, potentially exacerbating Americans’ lack of financial understanding. Many people have had to confront new circumstances and weigh questions regarding everything from how to make college payments to whether they should delay retirement. Not surprisingly, those who are the most anxious about their personal finances are those who have been hit hardest by the pandemic. Nearly 75% of Americans with annual household incomes of less than $50,000 said they were at least somewhat concerned about their financial situation right now, compared to 63% with annual household incomes of $100,000 or more, according to a September survey from the National Endowment for Financial Education.3
What can be done to improve Americans’ financial knowledge? A variety of organizations such as the Council on Economic Education focus on this idea. Besides the national organization, the Council is expanding its list of over 200 affiliate organizations across the United States and offers a numerous programs, events and resources for schools and teachers. SIFMA (the Securities Industry and Financial Markets Association) offers The Stock Market Game at schools nationwide and provides a range of other programs and resources for schools.
On a smaller scale, D.A. Davidson also has been working to close the financial knowledge gap. For the last three years, the firm has worked in partnership with the Metropolitan YMCA of Los Angeles to operate the Moneywise Program, which provides southern California teenagers with financial literacy courses. Following initial successes, the program was expanded in 2019 and again in 2020 to reach larger numbers of teens through their high schools and through some Boys and Girls Clubs.
While these initiatives have not fully remedied the lack of important knowledge across the United States, they represent solid steps in that direction. And together they may help Americans eventually earn an “A” in financial literacy.
1 Council for Economic Education
2 National Foundation for Credit Counseling
3 National Endowment for Financial Education
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