Numerous reports, including one from the Center for Financial Literacy at Champlain College, show how clueless American adults are in financial matters like credit, saving and spending, and preparing for retirement. For the sake of individuals, families, and this nation, we must help young Americans become financially capable citizens.
One way to do this is to teach personal finance in high school. But not enough students in the country are getting that education: Only one in six high school students in the United States is required to take at least one self-directed semester in personal finance to graduate, according to a study conducted this year by my organization, Finance new generation personal.
“A University of Wisconsin-Madison study found that only 37% of K-12 teachers had taken a college course that offered personal finance.”
In 23 states and the District of Columbia, less than 5% of students in the 2018-19 school year were required to take a self-directed semester in personal finance.
Many states have passed laws in recent years requiring schools to provide such courses. But we also need to train more teachers of personal finance in secondary schools – as important as the legislation is, it is even more important to encourage curricula and professional development for teachers.
If there’s one thing I’ve learned from trying to bring personal finance education to every high school student in America, it’s that high school teachers are the people who will make it happen.
“Teachers matter more to student success than any other aspect of schooling,” according to the RAND Corporation, a nonpartisan think tank. “When it comes to student performance on reading and math tests, a teacher is estimated to have two to three times the impact of any other school factor, including services, facilities and even leadership.”
I agree. We need to develop a body of qualified and confident teachers. In fact, laws should incorporate the required investment in teacher development to ensure that it has the intended positive impact.
Most high school educators have backgrounds teaching subjects other than personal finance, so it’s no surprise that research like a 2010 University of Wisconsin-Madison study shows that few teachers have the confidence to teach the material, although a majority are ready to learn.
“Teachers felt the least prepared in terms of risk management and insurance, savings and investment, financial responsibility and decision-making, and credit and debt.”
The study found that only 37% of K-12 teachers had taken a college course that offered personal finance. “More than 70% of K-12 teachers indicated they were willing to participate in formal financial education training,” the study found. Of these personal and financial subjects, teachers felt the least prepared for risk management and insurance, savings and investing, financial responsibility and decision-making, and credit and debt.
The best high school teachers see that their students need financial knowledge and skills. Our team has met thousands of dedicated educators in all 50 states with big ideas and a passion to help the cause.
Courtney Poquette, a business teacher at Winooski High School in Vermont, begins her personal finance class by asking her students what they would do with $1 million. Most students think of buying things, but at the end of the course they also think of investing at least some of that money.
Poquette, who has attended professional development sessions and now leads them, often asks students to thank her for teaching them how to budget, manage credit and make other financial decisions. We know of other great teachers in Vermont, but they don’t reach all students since Vermont is one of many states that doesn’t require personal finance courses in high school.
Kayla Bousum, who has also attended and led personal finance education seminars, teaches a required course on personal finance at Johnston High School in Johnston, Iowa. The course had such an effect on one student that he asked her if she would help him open a Roth IRA.
Educators like Poquette and Bousum see that their college-bound students need to be able to think critically about their financial decision. They also see high school graduates entering the workforce who have to think about emergency funds, pay taxes and boost their credit scores.
They are the kind of teachers who drive seven hours a night to attend one of our personal finance workshops. They are like the hundreds of teachers who have given up 20-40 hours or more of their summer to attend our professional development sessions in order to improve their craft.
“Places with state-mandated personal finance graduation requirements lead students to make better decisions about how to pay for college.”
We need a national army of math, economics, business, family, and consumer science teachers — you name it — willing to take on this new challenge. We need to invest in them to improve their financial capability, and then give them the most effective tools and methods for personal finance education.
Some people wonder if personal finance education actually works to make students more financially capable. Several studies dispel this doubt, including a study funded by the National Endowment for Financial Education in 2018 which found that “financial education in states with state-mandated personal finance graduation requirements brings students to make better decisions about how to pay for their college education”.
Give schools confident and competent teachers and link them to a relevant curriculum, and there is no doubt that the formula will lead to success.
There are many organizations – financial institutions and others – that should consider supporting this critically important challenge. Perhaps to inspire some of them, we’re offering $1 million to 100 high schools ($10,000 each) whose boards decide by December 2020 that every student deserves and should take a personal finance course before to get his degree. Over the next decade, we will significantly increase our financial support.
I challenge other organizations to invest in teachers so that together we can achieve what we call Mission 2030: to have every high school student in America take a personal finance course before graduation.
Tim Ranzetta is co-founder of Next Gen Personal Finance, a Palo Alto, Calif.-based nonprofit that offers a free personal finance and teacher professional development program.