While the number of states that are mandating high school students take a financial literacy course/curriculum prior to graduating is increasing, there are still only 21 states that require it. Now if a school wants students to take English Literature and learn about Shakespeare, I have no problem with that, as it is good to know.
But I am very confident that knowing what a budget is (gross income, expenses, etc.), understanding what compound interest is, knowing how to determine a income tax bracket, importance of emergency savings, difference of good vs. bad debt, spending on needs or wants, what after tax income, etc., I know these concepts are much more important than knowing who Shakespeare is. Hopefully students in these 21 states learn everything they can about finances and take the terms as well as concepts to heart.
I am constantly surprised at the lack of basic financial literacy as well as basic math skills. I have talked to people who are looking to start a business who have limited or even zero knowledge on the basics of finances, which is scary. I hope none of them went to school in one of these 21 states. As an example, I have met people who think if they “sell” $10,000 per month worth of T Shirts they can quit their day job.
But they do not understand that revenue (the 10K in sales) is not the same as net income. They do not know that if they sell 10K of T-shirts they may really be losing money as they need to pay for the cost of goods (material and time to make the t-shirts), marketing, shipping, insurance, website costs, and many other costs. Not to mention they need to pay income and self-employed taxes if they have any profit after subtracting all those expenses. The lack of knowledge is scary.
I am always shocked at how many people do not know that the federal government taxes you based on a progressive bracket concept. Your income is taxed at a the rate in a bracket and if you earn enough income to make it into a higher bracket, then you will pay that tax rate only for that income you have in that bracket.
Hopefully the high school students in these 21 states learn the basics of investing. As there are too many people who do not know about various investment accounts and how some retirement accounts give tax deductions. They do not know what compound interest is and the earlier you start investing (like hopefully these high school students do) the bigger the benefits.
I love history, geography, world events, “social studies” and many other concepts. Heck there was one year in which I passed social studies by just reading the daily paper everyday in class…while the teacher may not have been that happy that I did not pay attention and just read my paper, she could not question the results of my approach of learning on my own/acquiring knowledge or the grades I received! I enjoyed, and still like those and other topics, but I still remember the day when my high school Economic teacher (which is different than financial literacy) asked the class if any students owned any stocks, mutual funds, etc. and I was the only one to raise my hand.
My school did not teach me about investing (I learned a little from my mom and then ran with it), but hopefully the students from these 21 states will be saving and investing early as well if the school teaches them or gently “nudges” them in that direction. As I was learning (on my own) about interest rates, loans, debts and some of those other financial literacy terms that also carry over into investing. I realize how important that was to learn back then, when early.
21 states mandating classes is too few. Though the number of states mandating financial literacy is slowly but steadily increasing, the lack of knowledge is doing a disservice to youth. If your state does not require classes, make sure your kids gets exposed to the basic of financial literacy. Even if your state is one of the 21 and mandates classes, the lessons still need to be reinforced and practiced at home and in life. Maybe even get financial literacy apps for your kids.
Of course now only if all adults could improve their financial literacy as well instead of say watching Netflix or TV hours per day, scrolling through social media feeds, and other time wasters when the fact is there is a financial literacy crisis in this country. It is a fact as we wrote about when so many people can’t answer basic questions correctly. There really are not too many excuses to not know the basics these days as access to the information is easy and accessible. Even try a book about finances.
States with financial literacy
Note there are 24 states listed below. The reason being is that students in 24 states are told, and have to, take financial literacy, but only 21 states set guidelines at the state level. Some are locally run, and that agenda may be different.