Why We Want—But Can’t Have—Personal Finance in Schools

We've reached consensus: financial education is good for individuals and the economy. Trouble is we are now paralyzed by choice.

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The drumbeat for teaching personal finance in schools has been heard. Doing something about it is proving more difficult.

A nearly unanimous 99% of adults now agree that personal finance should be taught in high school, according to a poll last month from Harris Interactive sponsored by Bank of America. Yet just four states require a stand-alone personal finance course in high school and just 13 require money management instruction as part of some other class.

The reasons for this disconnect are varied:

  • Only one in five teachers feels qualified to lead a personal finance class, according to a University of Wisconsin study. So we don’t have enough instructors.
  • Personal finance concepts are not part of standardized tests like the SAT or ACT. As the saying goes in education circles: If it’s not tested, it’s not taught.
  • Education is run at the state level. So there is no federal authority to mandate personal finance classes, and each state has its own ideas on how to go about it.
  • There is little academic agreement as to what kind of personal finance instruction works. Many educators are waiting for clarity before they sign on.

We’re making progress. Teacher training through local government and school efforts, and through private programs like the PwC’s Earn Your Future is becoming more readily available. Nearly every state is participating in the common core initiative, which includes a push for personal finance. Nonprofits including JumpStart Coalition and Council for Economic Education have crafted teaching guidelines that should transcend state borders.

Plenty other nonprofits, financial firms and federal authorities have stepped up with free programs. The federal government sponsors three useful websites at mymoney.gov, moneyasyougrow.org and moneyasyoulearn.org. The Treasury Department, Federal Deposit Insurance Corp. and others offer learning materials.

Most big banks including Wells Fargo and Bank of America through a partnership with Khan Academy offer learning materials as well. So do credit card companies including Visa, which has a global financial education effort and a Practical Money Skills website. Regional banks are in the mix too. Next week, TCF Bank will unveil a free online financial education tool, joining several others.

This barely scratches the surface of what’s out there and points up a new and troubling aspect of the financial literacy movement. For all our good intentions the effort is terribly disjointed, and for the first time the overwhelming amount of information may be undermining our goals.

According to the Bank of America poll, 42% of adults are put off by the sheer amount of information available about financial issues and 28% believe it is difficult to learn about personal finance because amid so many choices they don’t know where to turn. We are suffocating under too much choice, which leads to inaction.

So the broad effort to raise the financial IQ of individuals has reached an inflexion point: Almost everyone buys the notion that this is important. Nine in 10 adults in the survey said it is “essential” for adults to be knowledgeable about their personal finances and that if more were knowledgeable it would benefit the U.S. economy. Yet the uneven effort to spread this knowledge may be getting in the way. That’s the paradox of choice: more is less. It may be time to settle on the best programs, duplicate them, and get rid of everything else.

2 comments
fivedavidng
fivedavidng

If we are proficient in finance, Companies will have a hard time in cheating and fooling us out of our money.  They won't make enough money to pay the share holders.  It is in the best interest of these companies to keep us dumb and happy.

JuniorAchievementUSA
JuniorAchievementUSA

This article outlines some of the challenges the U.S. faces in delivering sorely needed financial literacy education. While it is true that educators may not feel comfortable teaching students about money management, Junior Achievement's volunteers can help. Our volunteers come from the local community and are trained to deliver JA's financial literacy, work-readiness and entrepreneurship programs. Our programs support state learning standards and complement school curriculum by showing students the real-word relevance of what they're learning. JA programs teach students how to create and use a budget, and how to spend, save, and invest--critical skills for a financially secure adulthood.