Money, Now + Beyond

Why don’t our schools teach teens basic money skills?

Only five states require a financial literacy course in high school. So how do you expect young people to succeed in the real world?

Let’s face it — success is a game of money.

There are a lot of other factors involved, such as increasing inflation and the rising cost of living as well as the power structures that we work within, but sometimes it comes down to the dimes and nickels of it all. But how do we know if we’re using them wisely? For many of us, our only learning come from years of trial and error.

That’s a risky situation to put teenagers in. But there’s an obvious solution: high school financial literacy classes can provide a much-needed introduction to money management.

We spend our time in high school learning calculus and how to perfect the five-paragraph essay structure, and then, all of a sudden, we’re thrown into the world. Pressured to understand the job market, bank statements, balancing check books, investments, insurance, while trying to find a budget that fits our lives. We hear statistics on the news about a crippling debt crisis, like how the average American household is about $140,000 in debt. Almost $16,000 of that comes from credit cards alone. The average graduate has $37,172 in student loan debt, up six percent from last year, while college tuition rates are continuing to rise faster than inflationBut how do we expect recent high school graduates to understand the technical details of their debt and strategies for managing their finance without educating them?

If we want to produce the next generation of responsible adults, our education system needs to reflect it. Didn’t we all sit in our high school classes at one point and ask ourselves (and maybe even our teachers), “What’s the point?” High school is a vital point in development. It’s the time where we get our first jobs, our first debit card and savings account. It is our first introduction to finances, but we are thrown in without any training. High school is preparation for what comes next, whether that’s college or a career, but curriculums don’t reflect that. How are we going to be successful if we don’t know the difference between a CD and a bond?

If high school truly aims to prepare us for the real world, then financial literacy classes are a necessity. When I took one, my classmates referred to it as “the only class that mattered,” because for many of us, learning how to navigate the mysterious world of finances was more important than memorizing formulas for our physics test.

But there are currently only five states that specifically require at least a half-year course in financial literacy. The Center for Financial Literacy at Champlain College conducted a test that graded the 50 states and the District of Columbia’s financial literacy of high school graduates. The five states that did the best — Utah, Virginia, Tennessee, Missouri and Alabama — are the states require financial literacy classes. The states that did the worst — California, Alaska, Hawaii and Pennsylvania to name a few — are the ones that have no financial literacy requirement. There’s a clear correlation.

Since the recession, millennials have been increasingly aware of problems that can occur with money. At least 93 percent of American teens said that they were affected by the recession, according to a 2011 study done by Charles Schwab. With the growing awareness of money management caused by the recession, our schools are in dire need of financial literacy programs.

The study, which interviewed young adults from ages 16–18, also highlights the lack of financial knowledge of today’s youth. Only 38 percent of young Americans know how to establish good credit; 35 percent how to balance a checkbook or check the accuracy of a bank statement; only 31 percent even know what a credit score is; and 22 percent know how income taxes work. Even with all of this, only 46 percent of parents talk to their child about smart money management.

These statistics are frightening to say the least. The education system can no longer rely on homeschooling when it comes to money. We are working towards creating the next generation of lawyers and authors and entrepreneurs and doctors and executives, but how can we do that when we’re accidentally racking up overdraft charges?