Erin Gore was 29 when she gave herself an “F” in personal finance. She was a college grad with a good job but still had $19,000 in debt and owed $60,000 on loans she took out to attend school and buy a car.
“I thought to myself, what the heck happened?” she says. “Then I had an ‘aha’ moment: No one ever taught me personal finance.”
Gore, now 41, has a master’s degree in education and works as a personal finance teacher for Outschool, which offers online classes for kids and teens. Her main goal when teaching high school students the ABCs of personal finance? “I don’t want them to end up like I was at 29,” she says.
While students may be learning the 3Rs (reading, writing and arithmetic), they’re not getting enough instruction in personal finance. Many are ill-equipped to perform simple financial tasks later in life—like opening a bank account or writing a check—and master key money skills related to budgeting, saving and investing.
But a growing number of states are ramping up personal finance classes in public schools to boost students’ money IQ. Florida recently passed a law that requires all high school students to complete a one-semester personal financial course in order to graduate. The class covers how to manage a bank account, file a tax return and build wealth through investing.
Overall, 24 states now require students to take a personal finance course to graduate, up from just seven in 2000, according to Nan Morrison, president and CEO of the Council for Economic Education (CEE).
There’s also a push at the state level to offer personal finance-specific classes. As of April 28, there were 65 bills in 26 states to mandate that schools teach financial literacy as a standalone course, according to Nex Gen Personal Finance’s 2022 Financial Education Bill Tracker.
Here’s why: Data shows that high schoolers who receive personal finance training tend to have better financial outcomes later, such as getting better rates on loans and having higher credit scores, says Morrison.
“Our goal is to help kids spend and save wisely,” she adds. “If they start building these good habits in high school, it will help them throughout their lives.”
Teaching kids how to manage their financial affairs at school is also important because not every student lives with parents who are fluent in the language of money, adds Yanely Espinal, director of educational outreach at Next Gen Personal Finance, an outfit that builds personal finance curriculums for schools.
“Public schools can reach every young person, not just the lucky few,” says Espinal. “Even if you have the 3Rs down, you’ll still be at a disadvantage if you never quite grasp how to make money, manage money and make money grow.”
It’s no secret that many people enter the adult world unprepared for the money challenges they face. In fact, 84% of Americans 18 or older say financial literacy is a problem in the United States, according to a Voya Financial/Ipsos survey. Lacking key financial knowledge can also be costly: Financial illiteracy cost Americans an estimated $352 billion in 2021, according to a survey by the National Financial Educators Council.
“You don’t want your kids learning about money through the school of hard knocks,” says Espinal. “Because mistakes cost you a lot of money.”
Furthermore, when it comes to money, the younger generation doesn’t want to flunk out. Three out of four (74%) teens said they don’t feel confident in their personal finance knowledge, and 73% said they want to learn more, according to a survey by Greenlight Financial Technology, which helps teach children about personal finance.
Adults also see the value in learning personal finance concepts. Nearly two-thirds (63%) of U.S. adults cited financial education as the most important “supplementary” graduation requirement beyond math, English and science, according to Charles Schwab’s 2020 Financial Literacy Survey. And according to a new survey by the National Endowment for Financial Education, 88% of adults were in favor of their state requiring a semester- or year-long financial education course for graduation, and 80% said they wish they’d been required to take one back in their high school days.
What Kids Are Learning—and Why
So, what exactly should teenagers learn about money in high school? CEE’s Morrison says it’s important to gain a working knowledge around six key concepts: earning income, spending, saving, investing, managing credit and managing risk. A high school senior, for example, should be able to think through new financial decisions they will soon face, such as taking out a student or auto loan, shopping for a mortgage or saving for retirement.
But families can’t rely on schools to teach their kids everything they need to know about money. Moms and dads must play a role, too. Money is often considered a taboo subject, but parents need to get over that and talk about real-life household finances with their kids. “Involve them in financial conversations,” Espinal says. Discuss what things cost, what happens when they spend too much and how a 529 college savings account works. Other teachable moments include things like letting kids know how much the monthly cable bill or car payment is. “This makes money real for them,” Morrison says.
Financial education, Gore adds, is the only way to break the cycle of bad money habits: “When you don’t know how money works, that’s when you get into trouble.”
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Adam Shell is a freelance journalist. He has worked as a financial markets reporter at USA Today and an associate editor at Kiplinger’s Personal Finance magazine.