Financial literacy education
Financial literacy education in the United States has improved significantly in recent years. Over 90% of states incorporate elements of financial literacy into their school curricula, either as a prerequisite for graduation, through elective courses, or by implementing standards.
This progress reflects a growing recognition of the importance of equipping young people with the skills to manage their finances effectively. However, despite these advancements, there is still much work to be done. This article explores the state of financial literacy education in the US and explores key areas for improvement.
What Is Financial Literacy?
Financial literacy is the ability to understand and effectively manage various aspects of personal finance, including budgeting, saving, investing, and credit management.
At its core, financial literacy is about empowering individuals to take control of their financial futures by understanding how money works in the real world. Without a solid foundation in financial literacy, individuals risk making costly mistakes that can have long-lasting impacts on their financial well-being.
Financial literacy also plays a significant role in broader economic stability. A financially literate population is better equipped to contribute positively to the economy, as informed individuals are more likely to manage debt responsibly, invest wisely, and plan for their financial futures.
This recognition of the value of financial literacy has driven a growing movement to incorporate financial education into school curricula across the United States, ensuring that young people are prepared to face the financial challenges of adulthood.
State Of Financial Literacy Education In The US
Growing Adoption Of Financial Literacy Education
As of 2024, more than half of the states in the US have mandated financial literacy education as a graduation requirement for high school students. Specifically, 26 out of 50 states require students to complete a financial literacy course before receiving their high school diplomas.
This represents a significant increase in the adoption of financial literacy education compared to just a decade ago, reflecting a growing recognition of its importance.
California is the most recent addition to this list. In June 2024, the state passed legislation requiring high school students to complete a standalone one-semester personal finance course. This requirement will be fully implemented by the 2030-31 school year.
California’s move is particularly noteworthy given the state’s size and influence, and it marks a major milestone in the nationwide effort to improve financial literacy among young people.
Other states that have implemented similar mandates include Alabama, Connecticut, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, West Virginia, Wisconsin.
These states have recognized that financial literacy is a critical life skill and have taken steps to ensure that all students receive formal education in this area.
The Need For Nationwide Financial Literacy Education
While the progress in these 26 states is commendable, the remaining 24 states do not have a mandatory financial literacy course as a graduation requirement. In these states, financial literacy education varies widely.
Some states, such as New York, Arizona, and Texas, include financial literacy topics within other subjects like economics or social studies. However, this approach often means that financial literacy is not given the same emphasis or depth of coverage as in states with standalone courses.
In states like Colorado, Delaware, and Maryland, financial literacy standards are included in the curriculum, but schools have flexibility in how they implement these standards. This can lead to significant disparities in the quality and consistency of financial education across different districts and schools.
While the progress in the 26 states that have mandated financial literacy courses is encouraging, it is concerning that nearly half of the states still do not require students to receive this critical education.
Given the complex financial landscape that individuals must navigate in today’s world, it is essential that all students, regardless of where they live, receive a comprehensive financial education.
A Bigger Goal: Expanding Financial Literacy Education
Is One Semester Enough?
The current trend among states that mandate financial literacy education is to require students to complete a one-semester course. While this is certainly a step in the right direction, it raises the question: Is one semester really enough to equip students with the financial knowledge and skills they need to succeed?
Personal finance is a complex subject that encompasses a wide range of topics, from basic budgeting and saving to more advanced concepts like investing, credit management, and understanding financial products. It can be challenging to cover all these topics sufficiently in a one-semester course.
Ed Grocholski, CMO of the nonprofit educational organization Junior Achievement comments, “We don’t teach any other subject like that.” He compares it to learning English, where “you don’t give a kid their first English class in high school and expect them to go from learning the alphabet to reading War and Peace in one semester.”
Moreover, financial literacy is not just about understanding concepts; it also involves developing the habits and behaviors that lead to long-term financial success. This requires not only knowledge but also practice and reinforcement over time.
Grocholski adds that financial literacy is “a multi-grade approach.” Nonetheless, he asserts, “It’s certainly better to have a semester of financial literacy than to have no financial literacy education.”
To check whether JA financial literacy programs are offered in your area, you can do so here.
Lifelong Financial Education
In addition to expanding financial literacy education in schools, there is also a need for ongoing financial education throughout adulthood. Financial products and services constantly evolve, and individuals must continually update their knowledge to stay informed and make the best financial decisions.
Unfortunately, many adults do not receive any formal financial education after they leave school, leaving them vulnerable to making costly mistakes.
One approach to addressing this gap is to offer financial education programs for adults, such as workshops, online courses, and community-based initiatives.
These programs can help adults build on the foundation they received in school and stay up-to-date with the latest financial trends and products.
Employers can also play a role by offering financial wellness programs to their employees, providing them with the tools and resources they need to manage their finances effectively.
Various organizations can also provide help in promoting financial literacy education across America. For example, the Financial Literacy Coalition, a collective of educators, financial advisors, institutions, community leaders, and corporations, pool their resources, expertise, and passions to make financial literacy a national priority.
Final Thoughts
The state of financial literacy education in the United States is at a critical juncture. While significant progress has been made, with 26 states now requiring financial literacy courses for high school graduation, there is still much work to be done. The remaining states must adopt similar mandates to ensure that all students receive the financial education they need to succeed.
Moreover, the current approach of requiring a single semester of financial literacy education may not be sufficient to achieve true financial literacy. There is a strong case for expanding financial education to multiple years of schooling, providing students with more opportunities to practice and apply what they have learned.
Additionally, ongoing financial education for adults is essential to ensure that individuals can navigate the ever-changing financial landscape and make informed decisions throughout their lives.
