Four essential financial skills that must be acquired in life are: opening a bank account, building and maintaining credit, investing and saving for retirement. The problem is that these four essentials are rarely taught alongside STEM and other subjects in schools as part of life skills. But, this knowledge can pave the way to financial success and inclusion later in life.
Some children are exposed to occasional town hall meetings on topics such as how to save for college or why it’s not a good idea not to spend everything you earn from your first job. Yet widespread financial education is not happening on a large scale, which is a big problem. As a Forbes article points out, only 20% of people have someone in their life they trust to share the secrets of money. It’s a frightening statistic.
However, that’s not to say that financial education isn’t on the radar of some leaders and politicians across the country. According to a Council for Economic Education March 2022 survey, 23 states require high school students to take a personal finance course, and 25 states require high school students to take an economics course. On the other hand, three states plus the District of Columbia do not include any personal finance measures in their education standards.
Future Financial Literacy
However, things can improve. As noted in a 2021 New York Times article, more than 20 states are considering make financial literacy mandatory in their schools. Additionally, Congress is moving toward more financial education in classrooms. For example, Rep. Matt Cartwright (D-PA) introduced HR 1547—Youth Financial Learning Act, which seeks to provide grants to embed financial literacy education in public elementary and secondary schools.
Efforts are also being made at the state and local levels. According to National Conference of State Legislatures, 38 states introduced new financial literacy legislation in 2021. These are certainly steps in the right direction. And these steps are hopefully a positive start towards a future of financial inclusion for all.
Balanced personal budgets: an objective to pursue
Currently, millions of young people are learning to manage their finances on the fly. Maybe they see a parent or grandparent writing a check once in a while. More likely, they don’t. So many people now do most or all of their online banking. This means it is away from children’s eyes. So they don’t learn the ins and outs of these day-to-day transactions with their electronic banking.
This must change. Far too many people, especially those in underserved communities, have been excluded from the traditional financial system. It will be that much harder for their children and grandchildren to build a better life for themselves if they don’t understand managing a trading account or creating a budget.
Indeed, building a solid foundation of financial literacy is key to fostering greater financial inclusion. The more people become familiar with the ins and outs of the financial system and the resources available to them, the better they will be able to actively improve their financial well-being.
Take, for example, access to fair and affordable credit. Many people want to buy a car, own a house, or have the capital to start a business. They can only realize these big ideas if they have at least a modicum of understanding of what wealth is and how to manage it appropriately.
Demystifying money for the benefit of current and future generations
As a company, we already have many big and bold goals that we hope to achieve as soon as possible. Financial literacy should figure prominently, and the best place to get there is in schools.
What is the main benefit of integrating money management into the K-12 curriculum? On the one hand, bringing financial education into the classroom creates a life cycle of financial literacy. Children who learn about money at an early age can build on this basic knowledge as they get older and can understand more.
Another benefit is that educators become smarter in their own financial decisions. Teaching our teachers how to successfully navigate the traditional financial system and learn financial literacy themselves excites them about the subject and helps them teach children better.
A final benefit is the long term effects of demystifying money on entire families and even groups of friends. Young people can pass on the lessons they learn in the classroom to their parents and peers. This would allow everyone to learn and adopt healthier habits together. It’s a chain reaction that better prepares our communities to improve their financial health and well-being. This, in turn, would lead to greater financial inclusion in the future.
Again, these positive results can quickly start in the classroom. It should not be difficult for a school to start talk about money either in elementary, middle or high school. It doesn’t even have to cost anything, which is an ironic bonus.
Below are some strategic ways for teachers and administrators to make financial literacy a priority.
1. Schools can form financial literacy partnerships with key players.
A school or school district doesn’t have to “go it alone” when it comes to bringing money matters into the classroom. Many important players in the financial sector, such as banks and mortgage lenders, have programs to share.
Take Experian and the Skip $pie Coalition for Personal Financial Literacy, for example. The two entities have been partners for many years. Together, they recognize and celebrate the value of financial education in fostering increased financial inclusion in communities. Their work has provided teachers with information, tools, and resources to educate all students, especially those historically excluded from the traditional financial system.
2. Teachers can find ways to include money in daily conversation topics in class.
Some critics of financial education in schools might say it’s easier said than done. They point to too many competing priorities, too few qualified teachers, and a lack of time and resources. Of course, these are all valid concerns. Yet, when most people deal with money daily and rely on finances to navigate their daily lives, there’s no reason to relegate financial education to the sidelines.
Undoubtedly, it would be hard to think of another school subject that could or would be condensed into a single day or week. Teachers should be encouraged to talk about money in different ways. A history teacher might discuss how governments allocate their budgets or collect taxes. A math homework may involve a monetary component. Bringing money into the classroom is easier than it looks. There are online resources, such as the Jump$tart Clearinghouse, where teachers, parents, and even students can find effective financial education material from a variety of sources.
3. Schools and after-school programs may host special financial guests.
To their credit, many schools invite financial leaders from their communities into the classroom. As great as the teachers are, the visitors spice up the school day and these professionals can talk about the many and complex aspects of finance. Additionally, children can ask questions and get ready answers from people already working in the field.
The problem is that all too often, schools and individual teachers have to go through several stages to organize guest speakers and teachers. Perhaps a silver lining of the COVID pandemic is our increased comfort with virtual communication, which allows someone from a local bank, credit bureau, credit union, business to investment or nonprofit organization to take 30 minutes every two weeks to talk to a class about relevant money issues and answer questions. These little touchpoints might not seem like a lot, but can add up over time, helping people become more financially literate and paving a future path to financial inclusion.
4. Teachers can follow financial services organizations and professionals on social media.
Even for the most qualified personal finance teachers, it can be difficult trying to keep up with the constant developments in the financial field. Unfortunately, many schools lack sufficient funds for training programs, and the limited preparation time given to teachers is not sufficient to autonomous learning. But social media offers teachers an easy and inexpensive way to tap into expertise and trends in financial fields.
By following financial experts on social media and programs like Experian’s #CreditChat, teachers have access to ideas, information, announcements and resources. The trick, however, is to make sure you follow reputable organizations or credentialed professionals rather than self-proclaimed experts and influencers.
A world full of brilliant and confident fund managers
At present, the basic financial knowledge of children and adults across the country could be better. Research from OppU suggests that not only do more than half of all adults worried about his financesbut more than three quarters live from salary to salary.
It doesn’t have to be like this forever.
Ensuring young people understand finances as early as possible will help them adopt healthier behaviors around wealth accumulation and spending. As one of the world’s leading corporations, Americans must step up and take on the burden of helping children and adults make smarter financial decisions.
Of course, the education system has a lot to do. Nevertheless, including educational elements about money and the financial system will go a long way towards better financial inclusion, changing everyone’s opportunities and perhaps even changing the world.
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