I was recently at a conference that was attended mostly by high school business, finance and economics teachers. As you might expect, during a break, the question came up as to whether high school students should be REQUIRED to learn about personal finances in school. The required, or offered as an elective, debate has gone on for years in this country, even before I started going into the schools 21 years ago.
My research indicates that, today, more than half of the states don't require high school students to even take an economics class, which traditionally includes some discussions abou personal finances, and only 17 states require high school students to take a dedicated course in personal finance. According to businessinsider.com, this means that only 16.4 percent of U.S. students are required to take a dedicated personal finance course in order to graduate from high school. By the way, in New York State, economics is required for a Regents Diploma.
These are the statistics, even though studies show that students without a financial education are more likely to have low credit scores and other financial problems, and polls show that adults, including parents, overwhelmingly support a mandate. It also explains the recent polls, which I have discussed in this column, that indicate that 47 percent of U.S. students didn’t think they could handle their finances in college, and only 12 percent of millennials felt that they were prepared for their financial futures.
Here are some additional unfortunate statistics from Next Gen Personal Finance: 45 percent of students regret taking out as much in loans as they did; 76 percent of millennials lack “basic” financial knowledge; 70 percent of millennials are stressed and anxious about saving for retirement. Here are a few more from a recent article on thinktichthinkpoor.com: Four out of 10 millennials say that they are overwhelmed with debt, and 50 percent of millennials say that they are living paycheck to paycheck and are unable to save for the future. Then there are these from champlain.edu. On an international financial literacy test of 15-year-olds, the U.S. ranked seventh out of 15 countries, behind China, Canada, Russia, and Australia. Only 31 percent of young Americans, between 18 and 26, agreed that their high school education did a good job of teaching them healthy financial habits.
One thing I heard at the conference, but which I cannot verify, even though I have no reason to believe that it is not true, is that there has been a bill in Congress which would require a student to have taken a personal finance class before they can obtain a government guaranteed student loan. Now that seems to me to be something that should have total bipartisan support, but the reality is that it has not become law.
Over the years, I have heard many adults say that our high schools seem to want students to take more and more college preparatory courses, but not a separate personal finance course, even though roughly 33 percent of students don’t go on to college, and they could really benefit from a personal finance education as they go out into the real world.
When I do present to a class which has covered personal finances in some detail, all of the students say that every student should be learning these things. Does anyone really believe that it is only because they elected to take that course, and want to justify their decision? Then there are the teachers. Again according to thinkrichthinkpoor.com, a recent study showed that 89 percent of teachers agreed that students should take a financial literacy course, or pass a test, in order to graduate from high school.
Given my experiences in Bankruptcy Court, and working with students in the schools for 21 years, I agree that we should have a mandated personal finance course in the high schools. By the way, one of the principal reasons that I have heard for not having a mandated personal finance course in high school is that there are not enough qualified teachers to teach the course. For me, the answer is simple — offer more courses that teachers can take in college, graduate school and in continuing education opportunities, and if it is a budget issue, perhaps more taxpayers just need to look at the statistics and open their wallets.
But for me, that would not even be enough. There are two more things that we need to do. First, we should be working in age-appropriate basic money management lessons in the elementary schools. I have the privilege of working with Home and Career, Family and Consumer Sciences, math and social studies teachers, who do this, and I am sure that many other elementary teachers are doing this. They realize how important and needed this kind of education is.
Second, and even more critical in my view, is that more parents need to work with their children on the basics of money management in these more complex financial times. They need to realize that, even though the surveys show that many of them feel uncomfortable talking with their children about money and money management, they have to find a way to do it. They need to be proactive about this, because there are an increasing number of financial decisions that people have to make today, as the number of financial products increase and become more complex. It is no longer the world with meaningful usury laws, only three-year car loans, only three kinds of mortgages, and insurance and investment products that you could actually understand. Today, it is the world where we have, practically speaking, unaffordable seven-year car loans, mortgages that only the attorneys and accountants can understand, and the ability to incur over $1 trillion in credit card debt and $1.5 trillion in student loan debt, much of which is unaffordable.
We can make a difference, and significantly increase our youths' Financial IQ’s, if parents become more proactive, and the schools teach appropriate basic money management at all levels, with a mandated personal finance course in high school. I’m just saying!
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo or at http://www.monroecopost.com/search?text=Ninfo.