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How school districts can incorporate financial literacy

Strong, comprehensive financial education is a critical tool for empowering young people to take true ownership of their lives and dreams.

How school districts can incorporate financial literacy
[BillionPhotos.com/AdobeStock]

In Arizona, two students, both first-generation Americans, desperately wanted to go to college. But how would they pay for it? Was there financial aid? What about scholarships? If they qualified for those options, what did they need to do to apply?

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With the support of specialized financial literacy education, both students got into Arizona State University—and have also passed on their financial literacy lessons and taught loved ones how to save, apply for funds, do taxes, and more.

Financial literacy holds incredible power for future generations. Like the ASU students, kids all over the country—and even the world—can change the trajectory of their lives by learning how to handle a full range of real-life money situations. The rate of financial literacy is still critically deficient, however; a lack of financial knowledge is still one of the key reasons students find themselves experiencing credit card debt and other money struggles. Parents, teachers, lawmakers, and others in positions of authority have a good opportunity to bridge this gap and set students up for success by including financial literacy in K-12 education.

HOW SCHOOLS CAN PROMOTE FINANCIAL LITERACY

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American schools have room to grow when it comes to teaching kids about money. Fewer than half of American states (21) integrate financial coursework into another class, while just seven states require a stand-alone finance class. We are, however, seeing great progress in the move to implement a financial literacy education for all students: Florida recently passed a bill to include personal finance education as a requirement for graduation, and 26 other bills are pending in legislatures around the U.S.

Data on the effectiveness of financial education is clear. Students who learn about money in school from a young age are less likely to carry credit card debt, have better credit scores, find it easier to make ends meet each month, and are more likely to apply for aid. They’re even more likely to plan for retirement.

When a person is empowered with financial literacy, they tend to make good short- and long-term money decisions that align well with their values and goals. Those decisions can have a dramatic influence on the well-being of both individuals and their larger communities. The goal of financial education is to facilitate and support this wellness.

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Because personal finance education can have such a positive influence on opportunity, success, and satisfaction, parents, teachers, administrators, and lawmakers should think about how they can move financial literacy from the back burner to the forefront of curricula.

Financial education is a pathway to student competence, confidence, and equality.

Data from a survey of more than 300,000 students conducted in the 2020-2021 school year revealed the following high school student perceptions about their money readiness:

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• Thirty percent of students feel “prepared” or “very prepared” to fill out the Free Application for Federal Student Aid (FAFSA).

• Only about a third of students feel “prepared” or “very prepared” to read and understand loan terms, establish a college loan repayment plan, or estimate monthly post-college loan payments.

• Less than half of students feel “prepared” or “very prepared” to check and maintain good credit, select, open, and manage a checking/savings account, read a paycheck and understand net pay, and set up and follow a budget.

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Put simply, students aren’t confident they can manage financial areas well or that they can develop good money habits. Financial education is a way to flip these statistics, improve capability, and help students feel more secure. It can provide them with the insights and hands-on practice they need to face money tasks with less anxiety and establish positive behaviors.

All students deserve equal access to feelings of financial confidence and the good outcomes that can result from this knowledge. Not providing financial education in all states inevitably creates inequities. Creating more standardized financial curricula can support a more level playing field where various groups or regions are not marginalized.

SETTING STUDENTS UP FOR SUCCESS

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Financial literacy does not happen in a single shot. Just as teachers don’t offer just one math assignment or start kindergarteners out with calculus, financial education requires many lessons over time that accommodate the evolving cognitive and circumstantial needs of students. Financial education thus should be taught on a continuum throughout K-12. Lessons can be integrated into other courses, such as discussing the stock market in a history segment on the Great Depression. This integration can help improve student perceptions of how relevant financial competence is to their everyday lives.

Some financial areas, such as the fundamental steps of building a budget, are relatively consistent and will hold across generations. Other areas change rapidly. New areas also are introduced constantly. Financial education subsequently should include not only evergreen content but also information on real-time developments within finance. It needs to evolve to ensure that students are equipped for new modern realities.

One demonstration of this evolution is the updated standards from the Council for Economic Education (CEE) and Jump$tart Coalition for Personal Financial Literacy. These new standards are aimed at steering kids away from common money pitfalls and cover topics such as cryptocurrency, identity theft, mobile payments, and alternative financial services.

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With financial education, students can confidently build their own future.

Strong, comprehensive financial education is a critical tool for empowering young people to take true ownership of their lives and dreams. It holds the potential to improve student confidence in everyday money tasks and it tends to improve financial decision-making and behavior. Schools are already linking financial education to equity initiatives in the hopes of breaking poverty cycles and developing generational wealth.


Alice Lee is a Former Educator and Senior Vice President, K-12 Implementation at EVERFI

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