Thoughts on financial literacy in education from Erin and her son Wyatt.
I have always been a learn-the-hard-way kind of person, and while that has served me well in some areas of life, it has been nothing but a hindrance when it comes to my own personal financial picture. Learning by doing is not easy — and can have some very dire consequences — in the world of personal finance.
Because of the education system I grew up in, learning about finances wasn’t available to me until college. Yes, you read that correctly. I learned about fiscal responsibility and personal finance in college…after taking out student loans, inheriting my first car, moving into a dorm where I’d be managing my own budget, and many other landmark occurrences in my life that should probably have been preceded by a healthy dose of financial education.
My experiences and those of my peers have led me to believe that financial literacy, taught at age-appropriate levels several times during a minor’s education, could likely set us up for much greater success as adults, not just in finance but also in life.
This is why I was so thrilled when my son — who was equally thrilled — announced to me that his middle school curriculum included a Financial Literacy course at the 7th grade level! Wyatt’s thoughts:
"Financial literacy is important for kids to learn because school claims to teach kids how to be successful adults but how are kids supposed to be successful if they don’t learn how to manage money and make money?”
Now, I will admit that my child is probably far more excited to learn this subject than many would be, but we’re already seeing some incredible impacts among Wyatt and his peers. Wyatt, for example, is asking more questions about things he hears, sees, and wonders. He’s thinking strategically about what to do with his birthday money and allowance. Additionally, he’s engaging with money discussions in the media — especially social media — with far more critical thinking and “tools in his belt,” a result that I think will have far-reaching positive effects.
But I’m not the only parent, and my son is not the only student. So in this post, we'll discuss the potential pros, cons, and impacts of teaching financial literacy in schools, plus some ideas for financial education both in the home and in K-12 schooling.
Jump to:
What Is Financial Literacy?
Financial literacy or personal financial education refers to the knowledge and skills needed to understand core money concepts like:
Making, maintaining, and following a budget
Understanding debt, interest rates, and yields
Savings
Basics of investing and retirement
These baselines of knowledge can easily be scaled to accommodate age and level of education and are the foundation upon which people make the financial decisions we all face daily as adults.
So why wouldn’t we teach them in schools? The answer to that is more complex than it may seem.
Should Financial Literacy Be Taught in Schools?
Some folks believe that financial literacy isn’t a subject that should be taught in K-12 schools for personal reasons that we’ll discuss below. However, most who oppose mandating financial learning in the classroom argue that the United States’ public education system is already heavily burdened, and that existing curricula and other requirements or constraints may make it difficult to accommodate yet another subject. There are also debates about the efficacy of financial education, and these discussions are important to have. The debates do give me hope, though, because it means we’re at least talking about it, which is a wonderful thing.
Of those who argue that financial literacy shouldn’t be required or taught in schools, two of the most common arguments are:
Some parents don’t want their children learning personal finance from their teachers as opposed to at home.
While this is a valid concern, my opinion is that a person’s reservoir of financial literacy and, ultimately, the knowledge they draw from to make financial decisions should be fed by many fact-based sources — and the more the merrier when it comes to learning good money habits and un-learning or avoiding bad money habits. Because our own financial philosophies are intrinsically affected by our upbringings and experiences, we may accidentally inherit flawed financial concepts from parents with the best intentions, and should have equal access to financial education from other balanced sources as well.
Importantly, the financial opinions of our parents may be sourced from strategies that aren’t as relevant today, or that need to be understood in a more current context in order to be useful. Continual updates to financial education curricula in school settings can help provide such a context. The facts can easily and fairly be taught by professional educators, which then allows the parents to augment that foundation of knowledge with their own strategies, experiences, and philosophies.
Some worry that existing educators may not be equipped to teach financial literacy.
I share this worry, especially based on my own experiences and my interest in my son’s education. If we’re teaching students financial literacy, we want them to be presented with information that is valuable, fact-based, appropriate for their age level, and taught well. This is one area, though, where we sort of… have to start somewhere. This seems like a situation where an up-front investment of time and funding may be needed to kick-start a system that can eventually self-support.
The problem in a nutshell: If today’s educators are not currently well-equipped to teach this subject, it’s likely because they themselves did not receive the necessary education during their schooling. In fact, an FDIC report supports this, noting that “formal education is a predictor of teachers’ own perceived competence to teach specific financial topics, so the fact that teachers are acquiring little formal education in personal finance is important,” and that “more than 70 percent of K–12 teachers indicated they were ‘very likely’ or would ‘perhaps’ be willing to participate in formal financial education training” according to surveys.
A mandate to require financial literacy education in schools could equip educators with resources and training to provide that education, and could also allocate resources for such endeavors.
Some past efforts at financial education have not provided impressive results.
While this is true, a number of factors contributed to the limited success or lack of success of certain programs, and those that succeeded showed immense promise. We’ll discuss this more below, so keep reading to learn what worked, what didn’t, and what we might do better going forward.
Which States Require Financial Education in Schools?
Many school districts in the US at least offer financial literacy on some level and, according to the Council for Economic Education (CEE), 35 states do mandate some level of required learning in personal finance prior to graduation. This 2024 result is a significant jump from 2022’s twenty-three-state tally. If you’re interested, you can check out a handy map of these states and their personal finance and/or economic education requirements, plus the CEE’s published 2024 Survey of the States, which includes breakdowns of the various data points and some great tips for how to request that financial literacy be introduced in your school district if it’s not yet offered.
Why is Financial Education Important in K-12 Schools?
It’s hard to overstate the need for financial literacy during primary schooling, and the positive impacts it can have. First we’ll take a look at some quick facts about levels of and access to financial literacy, and then we’ll share some measured results of existing K-12 financial education programs.
1. Measuring Financial Literacy in the United States
According to Financial Literacy and Stock Market Participation, a paper published by the National Bureau of Economic Research (NBER), 40.2% of respondents who scored lowest in a screening for basic financial literacy reported that their primary source of financial education was a parent, friend, or acquaintance, or some combination thereof. Compare this to the highest-scoring quartile, where only 20.8% reported that same source(s) for their financial information. Unsurprisingly, school was not reported as a top source of financial information.
In a more recent paper published by NBER titled Financial Literacy and Retirement Planning in the United States, authors Annamaria Lusardi and Olivia Mitchell found that of respondents to a similar financial literacy survey, “people who score higher on the financial literacy questions are also much more likely to plan for retirement, which is likely to leave them better positioned for old-age.” This same survey found that the likelihood of answering the financial literacy questions correctly increased substantially with higher levels of education across all demographics.
2. Access to Higher Education Isn’t Equal
Many factors impact the ability of students to graduate from and seek higher education after high school, chief among them being race and socioeconomic status, as noted in the Race and Ethnicity in Higher Education 2024 Status Report published by the American Council on Education. If financial literacy rates increase significantly with higher education, as noted in the NBER paper discussed above, but access to higher education isn’t equal, that seems to indicate that access to financial literacy education is not equal either.
So what would happen if reliable financial literacy education was available sooner, and more equally?
3. K-12 Financial Literacy Works
According to a National Education Association (NEA) analysis of a study performed in Georgia and Texas, “[high school] students who received personal finance instruction had higher credit scores and were less likely to be delinquent on credit card payments. Over the course of the study in Georgia, student credit scores increased by 7 points for the first cohort, 18 points for the second cohort, and nearly 27 points for the third cohort. The Texas cohorts showed similar results.”
While much backlash exists to similar, older studies on the effectiveness of financial education programs, recent analysis shows that less-effective programs suffered from some common pitfalls:
Lack of funding or minimal funding
Poor preparation, materials, or implementation
Ineffective, minimal, or nonexistent follow-up on shorter-term programs
One-size-fits-all information
According to an NPR interview with Annamaria Lusardi, co-author of the aforementioned NBER paper and numerous studies in this field more recently, “Lusardi says that in the decade since she and Mitchell released their 2013 report, their experience teaching financial literacy has proved that these programs, properly taught, can work.”
A solid foundation of financial basics gained during K-12 education can help set students up for greater success — and smarter financial decision making — in adulthood, especially when paired with effective efforts in other arenas to address education and income gaps.
Okay so… how do we do it, and do it well?
How Can I Make Sure My Family Gains Financial Literacy?
Within the same interview, NPR quotes Lusardi as saying “it's particularly important to teach and consolidate principles of good personal finance as early as possible, which means starting at home — where children are likely to model good financial habits — and in school.”
But what does that look like, both in the home and at school? We’ll share a few ideas.
Financial Literacy Starts at Home
First and foremost, money should not be an off-limits topic of discussion within the home. Discussing finances (to an age-appropriate level, of course) with your partner and/or kids on a regular basis and being open to earnest questions can help reduce anxiety and increase trust. Additionally, teaching your kids how to have healthy financial discussions can go a long way to setting them up for success in future relationships!
Next, see what you can do to make discussions, routines, or activities centered around money a fun and educational experience. Now, I’m not suggesting you turn every single interaction into a learning opportunity or lecture, but I do think that taking advantage of opportunities for learning that feel exciting or fun can really help. For example:
Giving younger kids a budget to stick to when picking out which snacks you’ll buy when grocery shopping can serve the quadruple purpose of giving them the power of choice, helping them practice sticking to a budget, giving them something to do other than touching every single thing on the shelves, and ensuring the snacks you buy will actually get eaten instead of abandoned in the cupboard.
Middle schoolers may enjoy sitting down every 3-6 months to discuss what they want or plan to spend their money on in the upcoming months. Doing so can help them naturally prioritize things and, in many cases, learn that near-term splurges may mean sacrificing later goals. Keep it light, and be sure to open up the conversation to questions and ideas!
High schoolers may benefit from being responsible for certain financial responsibilities, starting small and growing as appropriate. Their share of a cell phone plan, being responsible for buying their own preferred snacks, or paying for their own hygiene supplies may be a good place to start! From there it’s easier to master planning ahead before larger expenses, like gas or insurance when they start driving, come into the picture.
Children of all ages can be part of healthy budget discussions, such as savings goals or sharing what your family’s entertainment budget is for the month and collaborating on how to spend it. Activities that help children understand the real-world costs of needs and wants can help build an understanding of budgeting from a young age!
And finally, it may be helpful to be open about your experiences with things like student loans, credit cards, or other debt. Debt can feel like a tempting opportunity to those without experience, but as most of us know, it can become a huge burden if not handled healthily.
Financial Education in Schools
As we discussed earlier, financial literacy in adults is not as common as it should be, so the first steps will likely need to involve:
Dedication of training, resources, and materials so that existing educators can provide consistent financial literacy education in middle and/or high schools
Designation of specific credits/hours for financial education programs, ensuring that these concepts are given ample attention as part of curriculum. These topics would likely need to be “touched up” in later years of schooling, or developed over multiple years with shorter time spent per year if necessary. This would help combat previous issues with retention.
More states would need to get on board!
On that last note, there are a number of things you can do to encourage such programs in your area, or to help ensure that existing programs are given the resources they need for students to succeed. Check out the information below if you’re interested!
Proposals and Guides:
Jump$tart’s proposed National Standards for Personal Financial Education
The Financial Literacy & Education Commission’s Federal Resources to Encourage School-Based and Youth Savings Programs
Tools, Games, and Resources (For School or Home)
The National Education Association’s article Tools for Teaching Financial Literacy
MoneyFit’s free online spending priorities activity for middle and high-school students
Playing games like Monopoly or other resource-based games can encourage financial strategy
Additionally, parents and community members can engage in school board meetings to suggest and encourage financial literacy education in their districts!
Financial Literacy in Schools: The Bottom Line
Levels of financial literacy in the US are not as high as they should be, and that has real-world impacts. However, there’s a lot we can do about that both at home and in schools! Financial education in K-12 schools can be part of a required curriculum, but it may take an up-front investment of resources and training to get consistent and effective programs up and running. These programs could vastly improve students’ financial understanding and future abilities, helping them to become more capable and successful adults.
We hope that you find the information and tools shared in this article helpful! If you have questions about our services and resources or about your own financial picture, we’d love to hear from you.
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