Our Kids Need to Be More Financially Literate. Why Aren’t Schools Helping?

The effort to improve financial literacy in schools has stalled. Here’s how we can turn that around.

by Laura Bailyn
Originally Published: 
A child sitting and writing something down with various dollar bills in the background

What are our kids not learning enough about in school? Ask 100 parents this question, and you might get 100 different answers. But when more than 2,000 young adults were asked what they wish they had learned more about in school, there was no contest: The top answers were how to invest and how to do your taxes followed by how to manage monthly bills.

The obvious takeaway: Kids want, and need, better financial education.

That survey, from USA Today and Bank of America, came out a couple of years ago. But since then, the United States has seen no growth in personal finance education, according to a new study from the Council for Economic Education. Only about one-third of states require students to take a personal finance class. And since 2016, no additional states have added personal finance to their K-12 standards or requirements.

Yes, as parents it’s up to us to teach our children some basics of financial literacy. They learn from the behaviors we model and the things we teach them about having a healthy, smart relationship with money. But two-thirds of Americans can’t pass a basic financial literacy test, and certainly can’t teach it.

I left a career as a lawyer and foundation executive to help build security and opportunity for a generation that has been swiftly losing it in a maelstrom of technological and economic change. In this new role, I’ve come to see that schools are a key to fixing this. In fact, it’s crazy that so many haven’t yet.

Schools can make a bigger impact

It can be hard to talk to our kids about money. As parents, we want to provide for them and to make them feel well cared for. And they want things from us that require money, so it’s almost inevitable for these discussions to feel emotional. Also, most of us don’t have the expertise to know just how much they’re prepared to understand at any given age.

This helps explain why 18 percent of parents say they never speak to their kids about money, while 31 percent say they do so once a month or less. Most only discuss money when kids ask about it. Sixty-nine percent have at least some reluctance to discuss finances — and this is especially true for families that have credit card debt or have declared bankruptcy.

Schools don’t have this problem. All kids, no matter what their situations at home, can be taught the same information. It’s dispassionate, with a focus on key principles. Since kids know their teachers aren’t going to buy them stuffed animals or approve in-app purchases in their video games, they’re in a better position to simply learn.

Researchers on financial literacy have found that while short-term behaviors (such as paying credit card and mortgage bills on time) are best learned through experiences that provide immediate feedback, long-term behaviors (such as building an emergency fund or retirement saving) are harder to learn by doing. These skills need to be formally taught.

In fact, the Federal Reserve found that when financial education is mandated, children grow into adults with higher credit scores and lower delinquency rates. The Council for Economic Education found that kids who received mandatory education in their schools are more likely to save, pay off credit cards in full every month, and take “reasonable financial risk” as adults. They’re also less likely than their counterparts to become “compulsive buyers.”

When it comes to financial literacy, the U.S. isn’t doing great compared to other parts of the world. A global study from the Organization for Economic Cooperation and Development (OECD) looked at financial literacy, which is “now globally recognized (sic) as an essential life skill.” It put the U.S. just below average. As we’ve plateaued, Italy and Russia have seen big improvements in financial literacy.

So, what can be done?

To ensure our children get the financial education they deserve, parents need to push at both the school and state levels. This means making phone calls, sending emails, and attending meetings with principals and school board officials. We can share the free materials schools can use to teach age-appropriate concepts, starting as early as Kindergarten and going all the way through high school.

To see what your state currently mandates, check out this interactive map. And the National Conference of State Legislatures tracks the latest legislation. You can find your state representatives with this easy look up tool found here. Contact them and discuss. Maybe even take up a petition.

I know, the last thing we need is another task on the to-do list — especially one that could involve a political battle. But the good news is that this doesn’t need to be a controversial issue. Most people are on board with advancing financial literacy. In many cases, our school leaders and policymakers just need parents to speak up on their children’s behalf. Results from the states where parents have succeeded in this effort show that it can be done — and is worth the effort.

Laura Bailyn is the founder and CEO of Kidfund, an app and private, social savings platform for kids and families.

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