California’s efforts to teach high school students about balancing checkbooks, saving money and other staples of personal finance were graded an ‘F’ in a national survey released last week.
The report, by the Center for Financial Literacy at Champlain College in Vermont, looked at how many hours of financial literacy instruction are required of high school students in all 50 states and the District of Columbia. ‘A’ grades went to Virginia, Utah, Missouri, Tennessee and Alabama, where all students are required to take at least one semester of financial literacy before they graduate.
The California Department of Education offers guidelines for K-12 teachers to incorporate financial literacy in their lesson plans and the state’s History-Social Science Framework includes financial literacy, but the topic is not required.
Some districts in the state include the subject as an elective, part of a math class or as an after-school activity, but many offer no financial literacy instruction at all.
“Districts in California have a lot of latitude as to whether they include this or not,” said Joshua Mitton, director of programs and outreach at the California Council on Economic Education, a nonprofit that promotes financial literacy and economics instruction in California K-12 schools.
“The question is, though, are we preparing students for the complex realities they’re going to face?” he said. “Student loans, buying a home, affording a car, choosing a credit card … these are basic skills you need just to survive and keep pace.”
Free financial literacy course material is available online for all teachers. Among those recommended by the state Department of Education are the Jumpstart Coalition, Next Gen Personal Finance and Council for Economic Education.
Most of the curriculum starts in kindergarten, with children learning how coins and bills represent certain values and can be traded for goods and services, and extends to 12th grade, with students learning how compound interest works, the value of investments, the actual cost of student loans and other more complicated financial topics.
It also includes career guidance. In one exercise, students are asked to describe their “dream lifestyle” — where they want to live, what car they want to drive, where they want to go on vacation. Then they estimate the cost of those items and how much they’d have to earn to afford them. They research salaries, how much college education is required for different careers and the cost of student loans.
“Debt, credit cards, saving for retirement — most people learn these things on the fly, through the school of hard knocks, and they make a lot of mistakes,” said Paul Golden, spokesman for the National Endowment for Financial Education. “These are life skills with large societal implications.”
Until the 1940s, financial literacy was a core component of high school math education in the U.S., but after World War II it was replaced by more theoretical math instruction, said John Pelletier, director of the Center for Financial Literacy.
Lack of personal finance education can have broad economic impacts, he said. The 2008 recession was caused in part by consumers obtaining subprime, adjustable-rate home mortgages they couldn’t afford, which led to a collapse of the housing market, bank closures and widespread layoffs.
“With the subprime mortgages, a lot of good people made a lot of big mistakes. They didn’t know what they didn’t know, and they trusted the lenders,” Pelletier said. “We’re still struggling to recover.”
Some schools in California offer financial literacy courses to their students. San Bernardino City Unified, Huntington Beach High School, Brawley Union High School, Hamilton High School in Los Angeles and San Diego Unified, among others, offer financial literacy courses either through economics, social studies or math departments. Some have financial literacy classes that meet the A-G requirements for admittance to California State University and University of California campuses.
But it’s not nearly enough, Pelletier said. Of particular concern, he said, is that low-income students are much less likely to attend schools that offer financial literacy than more affluent students, according to a 2017 study by Next Gen Personal Finance.
“The folks who need this the most are the ones least likely to get it,” he said. “We need to do more.”