Should Financial Literacy Be Required in School?

Do you know the difference between a debit card and a credit card? What about how to open a savings account or stick to a budget? Such basic personal finance skills are useful, yet they aren’t being taught to many kids and teens—at home or at school.

That could soon change, however. In the first seven months of 2021 alone, lawmakers in 25 states have introduced bills that would require schools to teach financial literacy. (Currently, 21 states make some financial lessons mandatory, but only 6 require a course with personal finance as its only focus.) A lot of the bills were inspired, in part, by the Covid-19 pandemic, which caused economic hardship for millions of American families.

Supporters of personal finance education point to studies showing that young people who’ve taken such courses are likely to have more savings and less debt later in life than those who haven’t. But not everyone thinks financial literacy classes are worth the investment. Some people say the cost of training teachers and establishing curriculums outweighs any benefits such courses might provide.

Should students be required to take financial literacy classes? Two finance experts weigh in.

Would you send athletes into a game without any practice? Hand teens the keys to a car without teaching them how to drive first? Of course not. Yet we let students enter adulthood without learning the basics of personal finance—like how to save for the future and set a budget.

Many American families struggle to make ends meet. Requiring financial education would give all kids and teens the tools they need to make informed decisions about earning money, budgeting, and handling debt. Such knowledge would benefit them, their families, and their communities.

When personal finance is treated like other subjects—with trained teachers and a well-defined curriculum—financial education works. Research shows, for example, that young adults who have studied personal finance are less likely to default on loans. (In finance, defaulting is when a borrower fails to make payments by the due date—or stops paying altogether.)

And in my experience, kids value their new financial knowledge. As one student said, “At first, it felt like a foreign language. Now I understand how to make more thoughtful decisions about my life. It’s a new way to think.”

Perhaps most important: Teaching financial literacy in schools helps ensure that all students have access to this critical information—including those who may not learn money management at home. Such education is a path to better economic opportunity. That’s why it needs to be part of all K-12 curriculums.

—Nan J. Morrison
President and CEO, Council for Economic Education

Recently, the number of states requiring students to take financial literacy classes has increased. That wastes time and money. Why? Such programs don’t work. They may increase knowledge, but they don’t change behavior.

Financial education programs usually cover such concepts as making a budget, comparing prices, and the importance of saving for emergencies and the future. Scholars have studied many such programs, with consistently disappointing findings. One 2013 study, for example, found that financial literacy education resulted in only a one-tenth of 1 percent improvement in financial behaviors among young adults, such as increased savings. That’s a tiny impact!

The reason many Americans’ finances are in bad shape isn’t a failure to budget or because they don’t understand how to save. It’s because the costs of rent, college, and child care have increased far faster than paychecks. No amount of financial literacy can fix that.

The programs that do help are those that give people information at the exact moment they’re making a decision. That’s why schools should provide high school students with facts about financial aid, especially different types of loans, when they’re trying to figure out how to pay for college. Beyond that, students are better off spending more time in regular math classes.

It’s foolish to make schools spend money on useless personal finance classes—and to force students to take them.

—Timothy Ogden
Managing Director, Financial Access Initiative, New York University