More students are getting personal finance education. But is it enough?

A teacher speaks to a table of students in the lunchroom at a school.

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According to the S&P Global Financial Literacy Survey, 43% of Americans are not financially literate – and gaps in financial literacy can lead to chronic money problems. In 2018, only 16.4% of US high school graduates received a personal finance degree. The number has now risen to about one in four high school students (22.7%).

With more states now mandating financial education as part of the high school curriculum, Next Gen Personal Finance estimates that at least one-third (35.1%) of high school students have completed a stand-alone personal finance course. As a result, two in three high school students are still without the education they need to be financially able.

More States Implementing Personal Financial Requirements

Currently, only eight states require high school students to take a personal finance course: Alabama, Iowa, Mississippi, Missouri, North Carolina, Tennessee, Utah, and Virginia.

Five other states are beginning to implement personal finance education at the high school level. Personal finance education is defined as a self-contained personal finance course that includes at least one semester or 60 consecutive class hours.

Michigan recently passed a bill that would make it the 14th state to guarantee high school students a personal finance class before they graduate. Momentum has picked up this year, with 26 state lawmakers introducing 60 different bills to expand access to personal financial instructions.

The Importance of Personal Financial Education

Personal finance education directly helps people with their financial well-being. Those with higher financial literacy are less likely to experience financial problems. Those with low financial literacy are:

  • Six times more likely to have trouble making ends meet.
  • Five times more likely to be unable to cover a month’s living expenses.
  • Four times more likely to spend 10+ hours a week thinking about or dealing with personal financial problems.
  • Four times more likely to be dissatisfied with their current financial situation.

Studies also show that personal financial education reduces the likelihood of young adults taking payday loans, and is positively correlated with wealth accumulation and wealth by age 25. States with required personal finance courses saw fewer defaults and better credit scores.

Next Gen Personal Finance’s annual report shows that access to personal finance education continues to be divided based on location, race, and socioeconomic status. Students across the country do not have equal access to personal finance education. Expanding personal finance education to all segments of society can help bridge the socioeconomic divide and help more people build their savings accounts.

The vast majority of millionaires have not inherited their money or earned a six-figure income. Financial success is often based on using personal finance basics, such as investing regularly and consistently over a long period of time, staying out of debt, and sticking to a budget. Financial education is the key to financial success and can help build good habits for the future.

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