It used to be that a workingman’s wages were sufficient enough to be able to save. The housing market was cheap, people paid more attention to their debt, and the stock market was easier to manipulate.
These days financial savvy has taken a dive. Ultra-low interest rates have encouraged spending, making everything from houses to cars expensive. Tuition at public four-year institutions has increased by 213% in the past 30 years, and nearly half of the 22 million Americans with federal student loans are either behind on payments or received permission to postpone payments due to economic hardship.
After analyzing data from high schools representing over 85% of all students, a study undertaken by NGPF (Next Gen Personal Finance), came up with the following conclusions:
- 16.4% of U.S. students are required to take a personal finance course to graduate high school.
- Only five states have a personal finance requirement: Alabama, Missouri, Tennessee, Utah, and Virginia.
- Outside of these states, the proportion of students with a personal finance requirement from their school drops to 8.6%.
- Meanwhile, only 5.5% of low-income schools (outside of mandate states) have personal finance as a requirement.
Financial literacy, which can be defined as an understanding of how to earn, manage, and invest money, is an important tool to improve the financial capability of our youth and communities. Students should be taught how to handle money—both at home and in school. This includes how to budget, open a bank account, pay taxes, handle college loans, and save as much as possible each month for emergencies.
Besides encouraging your school district to include a financial literacy course in high school, what can you do to help younger people learn about money?
The best way to teach financial literacy is for teachers to find a way to include information for financial security into their schedule, and devote a section of time to teaching students the basics. Parents can also take time to point out the basics of money management. There are plenty of websites, apps, and online documents to help anyone learn about preparing for future financial obligations.
A few basics every high school student should know:
One of the most basic aspects of staying on top of your finances is creating and keeping with a budget: taking what income you have and splitting it between household and personal obligations. Thanks to user-friendly tools, students can learn where their money goes, and how to keep their finances on track. Without following a budget, it’s easy to spend more than you have. My Money: The Math Edition CD-ROM is a great start to teach students about budgeting and more.
Learning how much it costs you to borrow money, either with a credit card or a loan, is an awakening to some people. It always costs you money to borrow money, and depending on the source, you can be paying at least an extra 25% with each monthly payment. Learning financial facts shows you to borrow only what you need and to pay more than the minimum payment when you can.
One of the problems the current generation faces is not having enough money in their savings account for emergency situations or large purchases. It’s easy to ignore things like retirement since it seems so far off in the future, and most jobs have some sort of health insurance to cover injuries. But employer coverage will take you only so far. Learning to save early on can help you gain the knowledge, practice, and set of skills you’ll utilize throughout your entire life. Collections such Money Skills in Action Set to books like The Survival Guide for Money Smarts: Earn, Save, Spend, Give, teach your students the important points and payoffs of saving.
Most elementary and high schools students don’t know or care about what a credit score is. But once they are old enough, they find out that all their financial mistakes could come back to haunt them. It is so easy to ruin one’s credit by late payments, no payments, and more. Once your credit is damaged, it takes a long time to build it up, and a decent credit score is important for life purchases such as car and house loans.
Identity theft occurs when criminals unlawfully gain access to someone’s personal information and steal it for their own financial gain. Whether it’s using somebody’s social security number to open new accounts or illegally hacking into a bank account, identity theft is a popular crime. Students should know how to protect their name, their social security number, and their credit numbers. A financial literacy program would also teach students password protection, how to keep up on their own credit history, how to double-check their bills to make sure there is no unusual charges, and more. The 21st Century Safety and Privacy Books Set covers identify theft through online sources such as Facebook, Twitter, and online shopping,
Nasco has a whole category dedicated to teaching financial literacy to all grades. Classroom start up kits such as Financial Literacy Unit Components for Grades 1-5 and Life-Project: A Resource for Teaching Personal Finance are a couple of great resources for teachers that can be incorporated into any high school math, business, or life skills course.
It is important that our students learn how the world of personal finance works before they get out into it. It is the difference between making a successful future and a world of debt and financial mistakes.