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Personal financial education: teaching the millennial generation the basics

Importance of teaching personal finance and economic basics in schools
Importance of teaching personal finance and economic basics in schools
Photo by Gina Young

Now that May is here, every student is counting down to the last day of school and looking forward to summer vacation. High school and college graduates are undoubtedly excited about the adventures that lie ahead. However, statistics show that many of these soon-to-be graduates may not be as ready to face the world as they think—at least when it comes to personal finance matters. Many students graduating from high school have not been taught how to balance a checkbook or a budget, let alone understanding the nuances of a mortgage loan. Students are graduating college with huge amounts of student loans that they cannot pay back due to a lack of quality, good-paying jobs. This lack of economic education and acceptance of large amounts of debt as the norm, may very well be leaving millenials ill-equipped to deal with the financial situations that they will inevitably face in life.

So why do so many young people not understand the basics of economics and finance? The answer is simple. They have not been taught.

According to the Council for Economic Education:

  • Only 17 states require a high school course in Personal Finance.
  • And only 22 states require a high school course in Economics.
  • Number of states requiring student testing in economics has dropped from 27 to 16 since 2002.
  • Only five states require a stand-alone course in personal finance for high school graduation.
  • Fewer than 20% of teachers report feeling competent to teach personal finance topics.
  • 81% of college students underestimate how long it will take to pay off a credit card balance.

Not offering these types of classes to our children is literally setting them up for financial failure in the future. Furthermore, studies indicate that financial education yields positive results for the students that had the opportunity to learn about it:

  • Students from states where a financial education course was required were more likely to display positive financial behaviors and dispositions:
  1. They are more likely to save
  2. Less likely to max out their credit cards
  3. Less likely to make late credit card payments
  4. More likely to pay off credit cards in full each month
  5. Less likely to be compulsive buyers
  6. More likely to take reasonable financial risk

“Financial Literacy is not rocket science; we just don't teach it." (Kay Hagan, US Senate, North Carolina)

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