Why there’s a push to teach financial literacy in schools
Photo by Tara Winstead
Originally Posted On: http://iquanti.com/
More and more educators, legislators, parents and financial experts are seeing an opportunity to teach the basics of financial management before kids leave high school and have to decide between entering the workforce or potentially netting large amounts of student loan debt.
Before making such a life-altering choice, many financial experts agree that young adults should be familiar with the basics of how debt, budgeting and other money matters work. However, until 2018 only 17 states had a required personal finance class in their high school curriculum.
Now, 37 states have integrated personal finance education into their required curriculum at some point between kindergarten and graduating high school. What’s led to this push towards greater financial literacy education in schools?
What is financial literacy?
Financial literacy is the knowledge of financial skills and tools, and it can include everything from the basics of how to write a check or open a bank account to more sophisticated aspects of investing, home ownership, and credit scores.
People with higher levels of financial literacy are more likely to be able to detect scams, as well as to avoid amassing debts that become impossible to repay. Poor financial literacy can often have a ripple effect, where one form of debt can lead to borrowing another form of debt in order to repay the first one, leading to potential credit damage and making repayment choices even more limited.
Schools can add to the financial knowledge base at home
Most children and young adults will get the basics of financial knowledge at home. However, not all parents may have the same level of knowledge about different financial topics, and not all parents are comfortable discussing financial matters with their children.
Formalizing financial literacy curriculums can help schools work with parents to ensure that all kids graduate with a high level of knowledge about how to manage their finances moving forward.
Additionally, for many parents the financial landscape looked different for them as a young adult than it does for their children. The cost of a university education has risen dramatically, and in the workforce, more people are working in the gig economy without full-time employment. Financial literacy education in schools can help fill in the gaps and provide the most up to date financial advice for the current generation of young adults.
The rising cost of college leaves teens with a crossroads
The primary reason financial literacy is more important than ever for teenagers to grapple with is that many are expected to make one of the most important financial choices of their lives immediately upon graduating high school.
The rising cost of college tuition and expenses has led to a student loan debt crisis in the Millennial generation of recent graduates, with many young adults feeling as though their financial futures have been crippled by enormous loans that they didn’t meaningfully understand when they took them out.
Helping students equip themselves with the financial knowledge they need before making this important decision is a large part of why standardizing financial literacy in schools is becoming a more popular idea every year.
Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.