High school graduates will soon face the challenges of finding jobs, paying bills and taxes, finding housing, and managing credit cards, bank accounts, mortgages, student loans and more. Some teens face these burdens even before they graduate because they have to help support their families. Money management is daunting at any age, but it’s especially difficult when you’re just starting out. Losing even a little money at first to fees, fines, or bad investments can be crippling, and bad credit can linger and hurt a young person for years.
Fewer than 1 in 4 high school students are required to take a personal finance course before graduation, according to Next Gen Personal Finance, which evaluates high school curriculum and advocates for all students to have access to a basic monetary education by 2025. The situation is even worse in many schools that are predominantly non-white and low-income. Only about 1 in 20 black and brown students have the opportunity to take a personal finance course before graduation, unless they live in a state that offers it to everyone, found the organization.
Critics of these types of programs argue that they are a band-aid that hides deeper problems in the US financial sector where low-income families and people of color often fall prey to high-fee products and, in some cases, face outright discrimination. in access to loans and other basic services. Personal finance courses are not a magic bullet. But they must go hand in hand with efforts to reform the banking system to make it fairer for all. Giving young people a basic education about how the financial system works is not just about helping them avoid the worst options; it’s about helping them choose the best path.
Likewise, those who argue that all students need a basic understanding of math and compound interest are naïve. Today, being savvy about personal finance is as much about knowing how to navigate paperwork and legal terms as it is about knowing basic math. Customers have to choose between different bank accounts and fee structures, different types of loans, and traditional banks versus non-bank lenders. The recent increase in “buy now, pay later” options in many stores is another reminder of how quickly old ideas can be repackaged for the digital age and catch consumers off guard. And then there is the rise of bitcoin and other cryptocurrencies.
The fact that Michigan’s bill passed with an overwhelming majority shows what a rare bipartisan issue this is. We’re glad to see that Virginia is one of the top-ranked states for personal finance education, according to Next Gen Personal Finance. Maryland is ranked in the middle and DC is unfortunately ranked 49th. Personal finance should be as essential to a secondary education as Shakespeare and algebra.