I believe Personal Finance is a state mandatory class required for graduation. How much they learn, I do not know. I haven’t looked over their shoulders since teachers stopped making me sign off on their folders in elementary school. That being said, we (I) taught my kids about $$$ since birth. It is just part of growing up and understanding the world. My spouse does not want to have anything to do with finances, so in case something happens to me, I made out a 4-5 page summary of everything we have - all kinds of important #s, bank accounts, retirement, insurance, what comes out of our paychecks automatically, when major odd bills are due, online passwords, security questions, and where all of the hard copies of everything are located. This gets updated months digitally and printed 3-4x a year. My kids (especially the eldest) have been my back-up financial person since middle school. If something should happen to me, they know where this is and what it means.
Both of mine are good with $$$. eldest S opened his own business the day he turned 18 and has been maxing out an IRA each year since, and also invests. He keeps careful track of his credit score. I have a small retirement account that I turned over to him from a managing standpoint a few years ago. Figured it was good for him to practice with and he couldn’t do worse with it than I did. My youngest just turned 18 and he will be getting a credit card soon and my eldest has been helping him set up a small investment account as well.
So both of mine know exactly what we have and do not have. That made the college financing decision a bit easier. They know we have ~3 years of in-state public tuition/room & board set aside and will commit to paying for a 4th. Anything more than that, they would need to pay for. However, if there is anything left over that is theirs to keep. Both of them are quite excited and active in insuring that there is $$$ left over.
And I am amazed how little the general public knows about financing. Even my fellow engineers. Many don’t understand the difference between a tax credit and tax deduction, nor what a graduated tax system means.
Now I’m wondering how some of these school districts implemented mandatory personal finance classes. My district is so focused on standardized testing that if it is not on the test, it is not taught. So frustrating. My kids can’t even read cursive writing.
Are districts with personal finance classes less focused on testing?
Here in NY we’ve had Regents tests forever - but they aren’t all consuming. They have a bunch of extra things you have to take - one semester of Econ or Gov or passing a test on the two subjects, health, at least one course in the arts, probably other stuff I can’t remember.
No required high school personal finance class in my kids’ public school, but there is one available, as well as other business type courses. The thing is the stronger students don’t have time for those electives, they are too busy cramming in AP and honors courses, orchestra, theater, etc.
Our state (IL) also just instituted a semester long civics course requirement a couple of years ago, but I don’t think it includes any personal finance lessons. This is in addition to the US History requirement. Don’t really understand that, I would certainly have preferred some type of personal financial management course instead.
Regarding the comment about cursive writing, the adoption of the Common Core did away with that. As cursive is not part of that curriculum, and the curriculum is packed solid, there is no time to teach it. At least that is what our elementary school principal said.
Will a personal finance course cause those prone to unlimited spending (until running out of money and borrowing capacity) to change that tendency?
“Unlimited spending” tendency means that there is no income level that is practically attainable, where increasing it will not result in increased spending to consume the increase.
Financial literacy isn’t nearly as important as frugality. Your savings rate is far more important than your investment strategy for young adults. Frugality vs overspending seems to be more a character trait, than a lack of financial knowledge. Most people could figure out a budget and Excel will do all the math. Where they struggle is not getting the house, clothes, furniture, electronics, car, and college they want.
A lot of the “living and spending below your income” comes from what young people learn in their homes.
If they see and hear parents say, we can’t do x because we already did y and will need to wait and save to be able to do it for another day that makes an impression.
If parents always say no worries, we can just charge everything we want and pay when we can later, that also makes an impression.
I bet a mandatory financial literacy course would result in fewer students attending unaffordable colleges and graduating with massive debt. Everyone should have to personally understand compound interest before they take a loan.
Yes. My kids’ high school has a financial literacy requirement, filled by one of two classes. It’s also covered as part of middle school home-ec (it’s not called that anymore but you know what I mean).
i think there are so many basic things to learn that I wish schools could help teach/reinforce. Although my 17yo is frugal, there are so many things he doesn’t know yet. Sure, he knows how to use venmo, but he doesn’t really understand how money works in life yet.
Like: interest on credit cards. debit card limits. Late fees, Hook-up fees, deposits. Checking accounts and reconciling checkbooks. Making sure you get your checks from your work and knowing how to ask for another check if you lose one! car loans. Student loans. insurance payments. savings for emergencies. budgeting. on and on.
he goes to a low SES school, and what some of his class mates spend money on just bewilders me.
Texas currently has a Bill in proposal (HB 1182) for a mandated high school financial literacy course be added to the curriculum. Still hasn’t been determined. At the University level it was interesting to see that a Personal Finance class was constantly canceled each semester and not for lack of student interest but very much political and where/what departments they want the funding to go.
@roycroftmom I have to agree there are many topics that would be of use to Students. Understanding the variety of loans and their calculations and options for payment/payoff. How your credit card and a loan are different - how they are calculated - what it means to just pay a ‘minimum’. Compare Simple interest/compounded/Rule of 78’s etc. Discussions on retirement savings, 401k, difference in mutual funds - fees, stock market and trading, bank accounts/cds/fees - how it all works, what’s a cashiers check, why you need a notary, etc. Endless topics. I just went over with my D on the phone what happens with a 401k when you leave a company. She’s a senior and was just curious to see what her strategy should be for saving and getting the maximum contribution and why.
I don’t recall ds’s school offering a course in financial literacy. It certainly is not a state requirement for graduation.
One issue I can see is that many high-achieving students aiming for elite schools are going to want to pack their schedules with AP courses to show rigor. A semester-long course in personal finance isn’t going to check off a rigor box. So, many of the presumed best and brightest might eschew a course like this, even where it is offered. They may also be operating under the delusion that, since they are so “smart,” they don’t need a nuts and bolts course in personal finance. Goodness knows I know plenty of highly educated people who haven’t a clue about how to manage their money. My dad was one of them. When he was in medical school back in the mid-50s, Latin was a required course. He always said he would have benefited much more with a course on how to run a business.
I agree with those who write about frugality being learned at home. One of my standard lines is, “Just becuase you can afford something doesn’t mean you should spend the money on it.” I could technically afford a bigger home, a fancier car, to travel more extravagantly, etc. But that doesn’t mean doing so is the wisest choice.
Ds was blessed (cursed?) by having a couple of CPAs for parents. My dh has always been more frugal than I, but I am certainly no spend-thrift. Ds is an Eagle Scout, and one of the required merit badges is personal finance. Dh was the merit badge counselor for that badge as well. When we facilitated Dave Ramsey’s course at church, Ds watched all the videos with us at home (he was probably 14 or so at the time). As an aside - we don’t agree with everything Dave Ramsey says/does, but hie program certainly espouses financial responsibility. Ds opened a Roth IRA as soon as he was able. He also opened an investment account as soon as he turned 18. Now that he is on his own, I certainly have no knowledge of his financial affairs, but I hope we set a good example for him at home.
One area church does a six-week “adulting” series for high school seniors that covers some of the life skills mentioned in other posts. The primary financial area ds had little working knowledge of when he launched was insurance - auto and health. Which is understandable since we had taken care of that previously.
ETA: I can’t speak to what is or is not taught/required in middle school. We were homeschooling then.
Financial literacy education started from a very early age. If you can count, you’ll soon be able grasp the concept of more/less/enough/not enough. Kids can learn from an early age that sometimes postponing a thing will, in the end, have a better result than immediate gratification. All of this is part of financial literacy. Not sure we are teaching even those basic principles.
D wanted to overspend her allowance when she was in 4th or 5th grade. I said ‘yup, I’ll give you the advance. And you must pay it back on credit card terms’. IIRC, the advanced amount was $5.00. I laid it out for her. If she paid me as soon as she received her next allowance, she’d owe $5.00. If however, she delayed repayment, the amount she owed would increase. Gave her a printed spreadsheet. She could see how expensive it would be to not repay ASAP. She still talks about that lesson and has not ever carried a CC balance.
They were also taught that X% MUST go into savings. Today, both kids have more in their bank accounts than a large number of soon to hopefully retire adults. They could replace their cars, survive 6+ months of a layoff, and buffer other unknowns. Both did get $$ from grandma and grandpa over the years. Both chose to consider these funds as untouchable unless used for purchase of a home or other potential investment.
D drives a 15 year old Toyota Highlander. We gave that to her during her college years. She has friends who give her a hard time about her car. Hey, don’t you ‘deserve’ a better car? How can you stand to not upgrade? These same friends have mounds of student loans, car loans and credit card balances looming over their heads. D just smiles.
IMO, financial literacy can not be taught simply from books and formulas. The lessons will ‘take’ best if there are actual consequences to behavior. The consequence of borrowing $5.00 on real life terms were powerful enough to drive home a point. Again, IMO…it is not the responsibility of the school to teach these lessons, that responsibility belongs to the parents.
FWIW, D attended an all female HS. An options course titled ‘women and money’ was always at capacity - with a waiting list.
@roethlisburger Yup…frugality! One of my parent’s mantras was ‘it’s not what you MAKE, it’s what you KEEP that matters’.
And, to further remove our kids from actual consequences, there is now discussion of forgiving all college debt.
Um, so the Costco hotdog/drink meal wasn’t good enough for you. You decided you ‘deserved’ and were ‘entitled’ to a 3 star Michelin meal. Now we want to relieve you of the consequences of that choice.
@OhiBro LOL. No. In our case, I think it’s a state mandated requirement. Testing is ALL we care about here, because we routinely fail across the board. At our HS, freshman class is typically 400-500 students. Usually 200-300 “graduate” though I’ve been told most of those require summer school to actually get a diploma. Nobody cares about anything except trying to get kids to pass those standardized tests and graduate. College bound kids are completely on their own. To the GC, CC is the same as ivy league. You are lucky to get a GC that will submit required items to colleges on time. We were lucky with both kids, but I’ve heard many horror stories.
@Hoggirl, was thinking what you already said… my all AP kid would not have taken a financial literacy class because he was too busy taking calc87… BUtI do believe I’ve done a fair job helping my kids figure out at least some good money habits, including pay no credit card interest, ever. My younger son was just bragging to me today about how much he’s saved in less than a year of work.
My youngest just turned 18 and he will be getting a credit card soon and my eldest has been helping him set up a small investment account as well.