David Brown spat in plenty of teachers’ soups. At least, that’s what some people thought after he released his song, Don’t Stay In School. But he wasn’t suggesting kids should drop out of school to carve out a living on the streets. Instead, the British university graduate says many courses shouldn’t be mandatory. He lists algebra as an example, arguing that most people will never use it in their day-to-day lives.
Plenty of essential content, he says, doesn’t get taught in schools. He lists personal finance among it. Every adult manages money but they don’t need algebra to do it. And if money-management is taught at schools, it’s usually an elective.
I taught personal finance at an American School in Singapore. It was an elective course, so students didn’t have to take it. The school started to offer the course in 2011. Enough students enrolled to create two classes. The following year, interest doubled. I taught four classes. One year later, my course load jumped to six classes. Students made it clear. They wanted to learn this stuff.
The school had strict class size limits. But every semester, parents and students begged that we break that rule for the personal finance class. My class was stuffed. I had to bring in extra desks.
Call me a fanatic, but I’ve long felt every student needs a basic course on money management. They shouldn’t be able to graduate without one.
Fortunately, I’m not alone. The Harris Poll has been conducting surveys among a wide demographic of Americans since 1963. In 2013, they found that almost 99 percent of adults say personal finance should be a mandatory high school course. But according to the Council For Economic Education, just 5 states required a stand-alone semester-long personal finance course for high school graduation in 2016.
I agree with David Brown. Such lessons are sorely needed. A global survey group (PISA) tests 15 year-olds around the world to determine how well they have learned “key knowledge and skills that are essential for full participation in modern societies.”
In 2012, they tested about 30,000 students from 18 OECD member countries to assess financial literacy. U.S. kids didn’t perform well. Half of the tested countries beat the United States. The U.S. scored just one place behind Latvia, two places behind Poland.
PISA tested students again in 2015. Once again, American students scored slightly below the international mean.
Some U.S. states, however, are taking action. Daniel R. Mortensen, the Executive Director for Virginia’s Council on Economic Education says his state is leading the charge for financial education. Virginia’s Standards of Learning include elements of economics and personal finance at every grade level. He says, “Since Virginia is one of only three states with a full-credit requirement in both economics and personal finance, Virginia’s students are poised to have a competitive advantage.”
A 2009 study funded by the National Endowment For Financial Education (NEFE) says 89 percent of American teachers believe students should take a financial education course or pass a competency test for high school graduation. But fewer than 20 percent of teachers felt competent enough to teach any of the six personal finance topics mentioned in the survey.
That’s why NEFE created a curriculum for teens between the ages of 13 and 18. It covers topics like budgeting, insurance, credit cards, loans, saving and investing.
The state of Virginia offers training for its teachers. Daniel R. Mortensen says Virginia’s state teachers need to have “the content knowledge and engaging, effective lessons to use in teaching their students.” Virginia’s students are required to take a full-year course in economics and personal finance to graduate.
But not everyone agrees that personal finance classes help. Helaine Olen wrote a strong argument for Pacific Standard, saying personal finance classes don’t benefit highschool or college students.
But a study conducted by research firm Penn Schoen Berland says otherwise. It randomly selected 1,200 high school seniors. The study claims that high school seniors who had taken a personal finance class were more likely to save money, have a budget and invest.
Ted Beck’s story in The Wall Street Journal says much the same thing. Graduates with tougher financial literacy standards get a better financial start. Referencing data from the Financial Industry Regulatory Authority's Investor Education Foundation (FINRA), he says high school students that take personal finance classes have better average credit scores and lower debt-delinquency rates as young adults.
The FINRA study shows credit scores improved the most among young adults in states that had mandated financial education classes. The best results came when the content was also integrated into the academic curriculum. In such cases, schools didn’t just include personal finance concepts in stand-alone classes. They blended financial lessons into other courses too.
For example, credit scores among young adults in Georgia improved by almost 11 points (1.8 percent) compared to credit score averages before Georgia mandated personal finance classes. In Idaho, credit scores increased by 16 points (2.6 percent). In Texas, scores increased by 32 points (5.2 percent).
If your child’s school district doesn’t mandate a personal finance course for graduation, lay on a bit of pressure. Based on public surveys, you’ll find plenty of support among other parents and teachers. It’s worth fighting for a better, more complete, education.
Andrew Hallam is a Digital Nomad. He’s the author of the bestseller, Millionaire Teacher and The Global Expatriate's Guide to Investing: From Millionaire Teacher to Millionaire Expat.