How Schools Can Improve Their Personal Finance Education


April 9, 2015 – By Sheiresa Ngo

High School Financial Education ClassAre high schools doing enough to provide a solid financial education? That answer might depend largely on state and school requirements, but some financial education experts say schools could do better.

The lack of a standard personal finance curriculum in America’s classrooms has been a hot topic for quite a while. Right now only four states (Missouri, Tennessee, Utah, and Virginia) require that students complete one semester of personal finance as a requirement for graduation, according to the JumpStart Coalition for Personal Financial Literacy. Roughly 17 states require high school students to take classes that incorporate personal finance, according to the Council for Economic Education.

The fact that financial education is a necessary component of the school curriculum is quite evident. Charles Schwab’s Teens & Money survey found that roughly 35% of teens do not know how to manage a credit card and 31% do not understand what a credit score is. Furthermore, 22% don’t know how income taxes work and 17% don’t know what a 401(k) is.

The Cheat Sheet had a discussion with four personal finance educators about what they think should be part of the high school personal finance curriculum. We spoke with Matt Paradise, vice president of Massachusetts JumpStart Coalition, Christopher Hensley, president of the Houston-Midtown Chapter of The Society for Financial Awareness, Sabrina Lamb, founder of World of Money, and Victor Ricciardi, finance professor at Goucher College and co-editor of Investor Behavior: The Psychology of Financial Planning and Investing .

The Cheat Sheet: Which topics should be part of the high school personal finance curriculum?

Matt Paradise: Financial capability is essential, not just pie in the sky, but necessary for survival. With mounting student loan debt and teens obtaining other consumer loans like credit cards and auto loans, it is as important as ever to equip our children with the skills to navigate the real world.

A young woman looking at a money jarIn addition to the standard topics like budgeting, credit, and basic banking, I would also suggest teaching behavioral economics and cultivating grit. In a recent Ted Talk on grit, Angela Lee Duckworth, a University of Pennsylvania psychologist, says the most significant predictor of success in kids isn’t social intelligence, good looks, physical health, or IQ. Duckworth says, “it’s about having stamina, sticking with your future — day in, day out, not just for the week, not just for the month, but for years — and working really hard to make that future a reality.”

Christopher Hensley: I live in Texas, one of the few states that actually passed legislation to require financial literacy as a prerequisite to graduating from high school. I think the curriculum should focus on a plain language understanding of wants versus needs and the importance of budgeting. I also love the gaming aspects of learning. I have seen organizations like the Texas Council on Economic Education do great things with The Stock Market Game. They use a stock market simulation to teach the basics of investing as students create and manage a portfolio over 10 weeks.

Sabrina Lamb: Teenagers are often socialized to solely interact with money as consumers, as opposed to producers, investors, and philanthropists. Thus, the high school personal finance curriculum should answer the question of why they should care about this subject as well as the short- and long-term impact of financial education on their lives.

Victor Ricciardi: My recommendation is to select a majority of the personal finance topics based on a “growth and hope” learning strategy. The behavioral finance literature demonstrates many people take an optimistic perspective of life. Therefore, teach about the fun and positive aspects of housing, real estate, stocks, bonds, mutual funds, and retirement planning. Then during the course also have the tough and important discussions about borrowing and spending issues including wants versus needs, budgets, credit scores, credit cards, student loan debt, and bankruptcy issues.

The Cheat Sheet: What are your thoughts on the state of financial literacy among American youth?
Woman Behind a Stack Of Books
Matt Paradise: When it comes to financial literacy, high school students in the United States fall below levels found in much of the world. According to results of an international financial literacy test released July 2014, American teens fall below half of their peers in a handful of other developed economies when it comes to financial literacy. I have personally seen many high school students throughout New England struggle with basic math concepts and have trouble balancing a budget.

Christopher Hensley: I have to say that I am optimistic. I know there is still a huge gap out there between what we know and what we should know, but in my opinion it is improving. In the three years that I have been a part of the Houston Money Week initiative I have seen non-profits, companies, and even the mayor working together to bring financial literacy to the classrooms. We have done a lot in a very short amount of time. I can’t help but think that the things that we get right here can be reproduced in other cities across the U.S. We have done a lot in a very short amount of time.

Sabrina Lamb: Though there are noble efforts to provide financial education to America’s youth, according to The Organisation for Economic Co-operation and Development (OECD), the United States is rated No. 17 in the world. Unfortunately, students from advantaged backgrounds are more likely to become financially educated. Our 10-year work in youth financial education is determined to change those results.