by Dr. Gladys I. Cruz
District Superintendent
Questar III BOCES
Many young people lack basic financial knowledge and skills due to insufficient personal finance training. This, coupled with an increasingly complex financial world, can make it difficult for young people to effectively borrow, save, invest, and plan for their futures.
According to the Council for Economic Education, 30 states have passed legislation or regulatory changes to require students to take a personal finance course in order to graduate from high school. Champlain College’s Center for Financial Literacy estimates that New York students receive approximately 15 hours of personal finance instruction during their high school careers as part of a 12th-grade economics course.
Many feel that this is inadequate and there is growing support for mandating financial literacy. In fact, last fall, the State Education Department’s Blue Ribbon Commission on Graduation Measures recommended to the Board of Regents that financial literacy should be a graduation requirement.
State Education Commissioner Betty A. Rosa and New York State Comptroller Thomas P. DiNapoli co-authored an op-ed last month in support of this recommendation. They wrote that it is “time for New York to catch up to states who for decades have taught a financial literacy course and required it for high school graduation.”
Over the past several years, there have been several bills introduced to include financial education in New York State schools starting as early as Pre-K. The comptroller has said these bills merit further discussion.
Only 20 high schools in the state currently offer a stand-alone, semester-long personal finance course for graduation, according to Rosa and DiNapoli. In their op-ed, the state commissioner and comptroller cited Akron High School, outside of Buffalo, as a model. The district first introduced its course in 2016 and two years later made it a graduation requirement.
Other states have already seen the benefits of implementing this requirement. Georgia, Idaho, and Texas reported higher credit scores and lower relative delinquency rates for students who take a personal finance course compared to those who did not.
Several factors have contributed to the need for stronger financial knowledge, including the effects of the pandemic and a drop in students’ math scores and interest. According to a 2023 report from the TIAA Institute and the Global Financial Literacy Excellence Center, U.S. adults have a “generally poor” level of financial literacy, leaving them vulnerable to predatory practices and struggling to build secure futures.
While finance is particularly relevant for high school students as they prepare for more independence, there are growing arguments that schools must start this effort as early as elementary school. Early experiences with financial decision-making can shape lifelong behaviors, attitudes, and preferences.
The complexity of today’s finances demands more than just basic math skills or a few hours of instruction within a traditional high school economics course. Age-appropriate financial literacy concepts, coupled with a stand-alone financial literacy course, will help young people make better, more informed decisions as they grow and become independent citizens.
Schools can also incorporate finance into existing math lessons, with exercises on budgeting, compound interest or calculating loan payments. English teachers can ask students to analyze ads or contracts to hone their critical thinking skills. Moreover, gamified learning platforms, guest speakers and collaboration with banks and financial planners can provide real-world learning for teachers and students alike.
Parents, guardians, and family members are encouraged to continue using everyday activities to supplement and extend classroom instruction. Use grocery shopping, paying bills, or comparing prices to teach children about budget, value, and decision-making. Local libraries, banks, and websites can also provide resources and activities to help empower your children to become more fiscally responsible.
Let’s equip our students with the skills they need to navigate the financial world with confidence. Join the call for mandatory financial literacy education in New York schools. It’s an investment in our children’s future and the well-being of our communities.
This column will appear in the Register Star and The Daily Mail newspapers.
FAQs
With that said, financial literacy enables them to navigate student loans, scholarships, and work-study opportunities, ultimately reducing the burden of student debt.
Why should financial literacy be mandatory in schools? ›
Financial literacy classes teach students the basics of money management: budgeting, saving, avoiding debt, investing, giving and more. That knowledge lays a foundation for students to build strong money habits early on and avoid many of the mistakes that lead to lifelong money struggles.
Why is financial literacy critical to a students success in life? ›
Financial literacy can help individuals reach their goals: By better understanding how to budget and save money, individuals can create plans that define expectations, hold them accountable to their finances, and set a course for achieving important financial goals.
Why is financial literacy helpful? ›
Financial literacy helps you manage your money wisely, make sound financial decisions, and achieve financial stability in life. On top of this, financial literacy also helps you get through the unexpected moments in life – like a medical emergency or a sudden loss of employment.
How financial literacy can help you make good? ›
Bottom Line. Financial literacy can help you make better financial decisions, save you money and help you avoid unnecessary debt.
What are the benefits of teaching students financial literacy? ›
Teaching financial literacy at a younger age helps children develop healthy, lifelong financial habits. The main principles of financial literacy include earning, saving, investing, protecting, spending, and borrowing.
What is the goal of financial literacy? ›
Financial literacy focuses on the ability to manage personal finance effectively, which requires experience of making appropriate personal finance choices, such as savings, insurance, real estate, college payments, budgeting, retirement and tax planning.
What are the pros and cons of financial literacy? ›
In conclusion, financial literacy has both its advantages and disadvantages. On the one hand, being financially literate can help individuals make more informed decisions with their money and avoid debt. On the other hand, financial literacy can also lead to people becoming more materialistic and obsessed with money.
Why should schools teach financial literacy essay? ›
Financial education is a critical life skill that should be taught in schools for the benefit of all students, regardless of their background. It empowers individuals to make informed financial decisions, break the cycle of debt and poverty, and contribute to a more economically resilient society.
What are the 5 key components of financial literacy? ›
The U.S. FLEC highlights five principles as the building blocks of financial literacy, known as the MyMoney Five.
- EARN.
- SPEND.
- SAVE & INVEST.
- BORROW.
- PROTECT.
Financial capability has a positive, long-term effect on health, regardless of race or ethnicity, gender, income, education, or employment. This is particularly true for mental health, with financial capability serving as a protective factor against high stress, anxiety and depression.
Why is money important for students? ›
Why is money important for students? Money is important for students to cover educational expenses and daily needs and to develop good financial habits for the future.
What is financial literacy for students? ›
Financial literacy refers to the understanding that includes how to earn, manage, and invest money and has a critical impact on students' ability to make smart choices.
Why is financial literacy required? ›
“There's a wealth of data about the benefits of learning these valuable lessons in high school, from improving credit scores and reducing default rates to increasing the likelihood that our future generations will maintain three months of savings for emergencies and have at least one kind of retirement account.”
What is financial literacy in your own words? ›
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. The meaning of financial literacy is the foundation of your relationship with money, and it is a lifelong journey of learning.
How can financial literacy help you in your daily life? ›
Financial literacy also promotes better decision-making in everyday life. From choosing the right bank account to understanding the terms of insurance policies, mortgages, and other financial products, having a solid understanding of financial concepts empowers you to make choices that align with your best interests.
How can personal finance benefit me as a student? ›
Students who are required to take personal finance courses starting from a young age are more likely to tap lower-cost loans and grants when it comes to paying for college and less likely to rely on private loans or high-interest credit cards, according to a study by Christiana Stoddard and Carly Urban for the National ...
What is the main benefit of becoming financially literate? ›
Financial literacy is important because it supports financial well-being, or a confidence in your ability to manage your money well. Everyone experiences financial ups and downs, but financially literate people may be more likely to: Manage money with a budget. Save more money for the future.
What is financial literacy and why is it important for kids? ›
In the complex financial landscape, it's essential to prioritize financial literacy for kids. It empowers individuals to make informed financial decisions, manage resources effectively, and achieve long-term financial goals. And the journey towards financial literacy begins early, during childhood.
