California recently passed a bill requiring high school students to take a class in financial literacy in order to graduate. I was curious about just what this entailed, so I took a look at the bill. There are a dozen basic curriculum requirements:
- Fundamentals of banking for personal use, including, but not limited to, savings and checking and managing to minimize fees.
- Principles of budgeting for independent living.
- Employment and understanding factors that affect net income, including worker rights such as:
- Prohibitions against misclassification of employees as independent contractors.
- Child labor.
- Wage and hour protections.
- Worker safety.
- Workers' compensation.
- Unemployment insurance.
- Paid Sick Leave, Paid Family Leave, State Disability Insurance, and the California Family Rights Act.
- The right to organize a union in the workplace.
- Prohibitions against retaliation by employers when workers exercise these or any other rights guaranteed by law.
- Uses and effects of credit, including managing credit scores and the relation of debt and interest to credit.
- Uses and costs of loans, including student loans, as well as policies that provide student loan forgiveness.
- Types and costs of insurance, including home, auto, health, and life insurance.
- Impacts of the tax system, including its impact on personal income, the process to file taxes, and how to read tax forms and pay stubs.
- Principles of investing and building wealth, including investment alternatives to build financial security, including tax-advantaged investments such as pensions and 401(k) plans, individual retirement accounts (IRAs), and stocks, bonds, mutual funds, and index funds.
- Enhancing consumer protection skills by raising awareness of common scams and frauds and preventing identity theft.
- Identifying means to finance college, workforce education, low-cost community college options, and other career technical educational pathways or apprenticeships. Financing options covered may include scholarships, merit aid, and student loans.
- Understanding how psychology can impact one’s financial well-being.
- Charitable giving.
In my usual snobbish way, my first thought about "financial literacy" was: Come on. What are they going to do with the smart kids who will understand everything in the first week and then have nothing to do? But after reading this list my concern is more with how average kids are expected to soak this all up. It feels kind of overwhelming for a C+ 17-year-old.
Plus I wonder who's going to teach these classes. Most adults aren't all that financially literate, after all, and a degree in history or art or English or even math won't help you out much. But I suppose they'll figure it out.
Good luck to them. I could barely get a foster son to grasp the basic principles of budgeting, and he still went and blew his entire pay check within a day or two of cashing it.
knowing the right thing to do and impulse control are different things.
You don't really need to budget as a teen. He probably knew he could spend his whole paycheck and he'd still have food and shelter.
The problem with financial education is high school is that kids don't pay their own bills until college, or in many cases after college, so there's a gap of years between when they learn about this stuff and when it becomes relevant to them. Heck, I was in my 30s before needing to learn about life insurance.
It seems like a course you should have to pass before anyone can make a student loan to you. Overall, it's a terrific idea.
You can be assured that there are publishers and authors furiously writing textbooks for such a course. It is not often that you have a guaranteed market of a million of more copies.
As with many of these type courses, many or perhaps most of the kids who take this will not master much of the material enough to remember/put it to use. But I also suspect an awful lot of kids WILL learn at least some stuff in this course that will make their lives better in many ways.
Wish my state would do this.
Even if most don’t master the material (which I’d guess is the case with every other HS class, too) I still think this is a good class. When they inevitably encounter these topics in adult life there’s at least the chance they will recognize the situation enough and stop to think there’s something they SHOULD know and then maybe slow down enough to give it some more thought.
This, exactly.
I don't remember most of the stuff I studied in high school and college. I couldn't list off trig identities if you put a gun to my head. But if I encounter a trig problem, I can recognize it as such and go look up the stuff I need to solve it. Without those classes, I'd be totally at sea.
Solving trig problems is not an important skill in most people's lives. But labor rights, budgeting, insurance, investments, taxes... those are a big deal for almost everybody. Giving people that basic level of exposure is vitally important.
As a former "smart kid" I absolutely wish they had taught us these things in high school, college and graduate school.
Ditto. I've had to learn it all on my own over the course of my life -- which I was fortunately quite capable of doing, but it sure would have been nice to have the head start.
And it should be more than just textbooks: They should make you fill out the forms like you're really filing taxes, or applying for a mortgage, or whatever.
Better to teach proper worship of the Almighty Dollar than the Almighty.
Absolutely!
I love this. I just had to teach all this stuff to my husband's adult children. I learned it all the hard way.
Every time they add another requirement for schools, it means less time devoted to other subjects.
Which means this is a great plan considering how much more impact this will have on kids lives compared to literally every other class in High School.
If kids come out of this knowing the difference between stocks and bonds — actually quite useful knowledge if you want to be an entrepreneur— they’ll be ahead of 99% of the population, so far as I can tell.
And then they can know enough to be pissed when it turns out all the options in the limited plate at a controlled 401k might all be trap options.
This is awesome, and I hope they can give it the time it needs, at least two semesters.
In my tiny rural public high school we had the librarian who specifically taught a history course which started with the Oregon trail but ended with the concrete jungle and labor unions - she was the school's union steward. We had a second instructor who was a woman who was independently wealthy due to investments who came to teach home ec at a reduced rate - it was her hobby. She taught us about banking and mutual funds and 401ks.
I wish more kids had that as a serious part of their schooling - not just facts, but the story that turned manifest destiny into corrupt labor practices; and then the positives and real risks inherent in a system that is weighted against use - but knowing how to use know to use it, even so.
I hope that enough qualified teachers can be found to not only teach.but to make the students understand the importance of the information - & to tell thrm to hang on to the textbooks.
I still wish that all schools had civics classes, as well as much better history courses, but that's obviously just a fantasy in today's educational battleground.
It's SOCIALISM or worse to have an educated populace making sensible life choices. They might even turn off Fox Newz.
Sounds good to me, even if most students learn only a little from that class.
About 1/4 to 1/3 of students never master the basics of algebra. Anyone familiar with the psychology of cognitive development knows that the stage of formal operations is NEVER reached by a similar proportion of human beings.
You can teach about interest, budgeting and banking at the high school level all you want, but the lenders will continue to have the upper hand over the consumers.
I suspect that if schools required all students to learn to read 19th century music, about a 1/4 to a 1/3 of them wouldn't succeed; music notation is essentially a very complicated graph that you need to read in real time with a pulse. The difference is that no one advocates for universal music education on that level!
Some people would work it out on their own without the help. Some people will never get it no matter how much help they're given. And then there's everyone else.
Education means folks in the first group get there faster, and folks in the third group get there when they otherwise would not. The existence of the second group doesn't mean we just throw up our hands and give up on teaching anybody.
I like this curriculum. Financial literacy (along with basic literacy) is a core component of modern living.
I would appreciate it if there were more basic civics courses. My sons seems to know very little about how government functions in the basic sense, and they are the GenZ's who don't entirely get how Biden did not overturn Roe v Wade or cause inflation.
We learned how to keep a checkbook balanced in 5th grade...
“It feels kind of overwhelming for a C+ 17-year-old.”
None of the stuff looks like something actual adults don’t have to deal with every year to function independently in modern day society, so when are 17-year olds supposed to learn about it if not before they become independent adults?
This is the current, if not terminal, point of education policy and reform -- state legislatures dictating specific curriculum outcomes. I just finished a paid day of online professional development required by recent RI legislation (it was 90% irrelevant to my job).
This stuff seems fairly normal now -- kind of a boiling frog situation -- but it is not AT ALL how high performing school systems work internationally, where professional expertise handles the specifics.
This curriculum would have been so much more beneficial to me when I was in HS than the economics class we had to take instead. Knowledge of the difference between M1, M2 and M3 money supplies has come in handy exactly zero times as an adult. OTOH, I wish someone had taught me sooner what to do, say, when you leave a job and you have to move your old 401k.
I teach a personal finance class at a Texas high school. It is an elective, but similar to the one California requires. It is a great class. There are a lot of resources for teachers and students. You do have to be careful, as many of the resources have a bit of bias (I.e. here are fun games to teach you to trade stocks instead of a boring low cost index fund). That said kids are getting absolutely terrible advice on social media, so any class will be an improvement. Will it make every student make sound financial decisions for the rest of their lives? No. But it will help them to not make dumb mistakes out of ignorance and hopefully give them pause while making future decisions.
Actually, I did get financial training starting about the middle of elementary school. I got an allowance, saved it up, then became a paper boy with a fairly large route (and legs like tree trunks). I got my own bank account at age 12 and kept track of what I had. I tended lawns for people on vacation or whose houses were up for sale.
I bought my first motorcycle at age 14 1/2 with the encouragement of my father - as he said to me: "At least while you are still on you learners permit I know there is only going to be one asshole in the vehicle." And since I could only afford a Honda 50 - I was not going to be drag racing with it... That came later after I could upgrade a bit. 🙂
Apart from the practicality, this is a good idea. By practicality I mean I understand that kids are swamped with classes they need to take, especially if they are headed for college.
A problem for classes like this is that they tend to get to be too pedantic. When you have smart, educated people writing the curriculum they can see so much of the material so it is hard for them to pare it down to the essentials.
Nevertheless, a half year class on the basics of money, banks, credit cards, compounding interest, stocks bonds, debt, credit scores would be great.
I’d follow with a half year class on science and technology. Teach the periodic table (that it exists), conservation laws, elements vs compounds, extreme basics of electricity and magnetism, thermodynamics (no free lunch). Teach about magnitudes, age of the universe, size of the earth size of the galaxy, size of an atom, a virus, a bacterium, a cell, DNA. How rechargeable batteries work, gas engines, electric motors, lasers vs ordinary light.
For both these classes a really valuable part would be to show kids how to find more information in the future if they want it.