High school graduates will soon face the challenges of finding a job, paying bills and taxes, finding a home, and navigating credit cards, bank accounts, mortgages, student loans, and more. Some teens face these burdens even before graduation because they have to help provide for their families. Managing money is daunting at any age, but it’s especially difficult when you’re starting out. Losing even a little bit of money in the beginning in 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 must complete a personal finance course before graduating, according to Next Gen Personal Finance, which assesses high school curricula and advocates that all students have access to basic money education by 2025. worse in many schools that are predominantly non-white and have lower incomes. Only about 1 in 20 Black and Brown students have the chance to take a personal finance course before graduation unless they live in a state that offers it to everyone, the organization found.
Critics of these programs claim they are a band-aid that hides the deeper problems in the U.S. financial sector, where lower-income families and people of color are often bombarded with expensive products and, in some cases, face outright discrimination in obtaining of access to loans and other basic services. Personal finance classes are not a panacea. 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 in how the financial system works isn’t just about helping them avoid the worst options; it’s about helping them choose the best path.
Likewise, those who claim that all students need a basic understanding of mathematics and compound interest are naive. Being good at personal finance these days is as much about knowing how to navigate paperwork and legal terms as it is basic math. Customers have to choose between different bank accounts and fee structures, different loan types and traditional banks versus non-bank lenders. The recent proliferation of “buy now, pay later” options in many stores is yet another reminder of how quickly old ideas can be repackaged for the digital age and caught off-guard by consumers. And then there is the rise of bitcoin and other cryptocurrencies.
The fact that Michigan’s bill passed overwhelmingly highlights how rare this is a bipartisan issue. We’re pleased to see that Virginia is one of the top-ranked states for personal finance education, according to Next Gen Personal Finance. Maryland is in the middle and DC unfortunately is in 49th place. Personal finances should be just as important to a high school education as Shakespeare and algebra.