Thu, May 12, 2022 7:01 AM
By Heidi Borst, Wealth of Geeks
On March 22, 2022, Florida Governor Ron Desantis signed a bill making a course in financial literacy a graduation requirement in the state; the legislation will go into effect for students entering high school in the 2023-2024 school year. But Florida isn't the first state to enact legislation supporting financial literacy education in schools.
In fact, according to the NextGen Personal Finance's 2022 FinEd BillTracker, as of April 21, twenty states across the country have similar bills mandating that financial literacy be taught as a separate course in primary schools. And experts say it's about time.
Harold Abraham, Ed.D., an elementary school principal and adjunct professor at Montclair State University in New Jersey, says that financial literacy is so important that it should be a regular part of every level of schooling.
"It's critical as educators that we teach students how to save, earn, borrow, invest, and protect their money intelligently. This will ensure that whatever their path looks like, they will make healthy financial decisions along the way," says Dr. Abraham.
Educators discuss what's covered in a financial literacy curriculum and why it's so important for kids to learn about money management and more.
Financial Literacy Classes Teach Essential Money & Life Skills
With a focus on becoming a smart consumer, financial literacy courses teach kids how to build wealth and manage their finances. For example, students may learn how to create a budget and invest for retirement- skills that typically aren't taught in a high school economics class.
But when it comes to financial literacy, every student's journey will look different.
"It's critical as educators that we teach students how to save, earn, borrow, invest, and protect their money intelligently. This will ensure that whatever their path looks like, they will make healthy financial decisions along the way," says Dr. Abraham, emphasizing that financial literacy must be infused into the curriculum at every grade level.
Alicia Torres, Program Director of Learn and Earn, an afterschool program for NYC youth in grades 11-12 provided by NYC-based nonprofit group RiseBoro Community Partnership, says that many of the youth she works with lack the basic fundamentals of financial literacy- things as simple as budgeting or even opening a bank account.
"We provide these youth with academic support, work readiness training, college access, guidance and counseling, follow-up services, financial literacy, mentoring, leadership development, and a paid summer internship," says Torres.
Understanding compound interest is an essential component of financial literacy, says Benjamin Caldarelli, co-founder of Princeton College Consulting, a New Jersey-based educational consulting company. That means learning how to evaluate the difference between good money (savings/investments) and bad money (borrowing/credit), he says.
"It is exciting for kids to learn what the difference in their savings would be at retirement if they started saving at 20 vs. 25 vs. 30," Caldarelli says.
What's more, understanding that most financially secure people are not celebrities or well-known entrepreneurs, but rather regular people who invested with a sound strategy, can be empowering and inspiring to kids.
The Importance of Financial Literacy on a Societal Level
Finances are a part of our everyday lives, so financial literacy should be a required course in schools nationwide, says Torres. However, she says that many youths who participate in Learn & Earn enter the program with little financial literacy.
Regardless of economic status, every individual deserves the right to know how to manage their money and the differences and benefits of bank accounts, credit cards and credit scores, retirement funds, investments, loans, and more.
We have a student loan debt problem as a society, says Caldarelli. Greater financial literacy may help students and their families to appropriately evaluate college financing decisions- decisions that have the potential to affect a significant portion of their lives.
"For the individual, it is harder to get out from under a crushing debt load, which makes it more difficult to buy a home, car, and other goods and services as well as get married and start a family. This hurts the economy as a whole," Caldarelli says.
Financial literacy, personal and public, is something every student needs to be a responsible citizen, Caldarelli says. "Personally, our financial security is often dependent on our ability to understand how money works for or against us. Publicly, as a voter, it is important to be informed enough to evaluate what government representatives are saying and doing. Some of our political divide is due to disagreements that arise not necessarily from ideology, but varying levels of financial literacy," Caldarelli says.
Torres says that over the years, learning the role finances play in their lives (and within their communities) has made all the difference for her students, whether their path is secondary school, employment, apprenticeship, or the military.
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