I’ve long believed that teaching personal finance in our public schools was one of the potential cures for our “living paycheck-to-paycheck” culture. In fact, I advocated for teaching personal finance in schools in one of the first articles I ever published on this site, more than a decade ago. Recently, an increasing number of states (now 23 total) have agreed with this premise enough to mandate that their high schools teach personal finance to their students.
Intuitively, this makes a lot of sense. Most Americans have had close to zero personal finance education in their lives within their school curriculum, and most Americans happen to live paycheck-to-paycheck. Therefore – one could reasonably conclude – a way to address the problem would be to teach more personal finance in schools.
But, according to a well researched article in the Washington Post recently, teaching personal finance in schools is “a waste of time“, and those hours of study would much more effectively be used for math or other coursework.
The author cites some fairly robust studies on this topic:
The most comprehensive meta-analysis of financial-literacy program evaluations, published in the journal Management Science in 2013, examined 168 papers covering more than 200 studies. It found that financial-literacy education was responsible for a 0.1 percent change in financial behaviors, like increased savings or reduced borrowing.
A more recent meta-analysis of 37 experimental studies (which are more reliable than observational studies) of financial education in schools trumpets more-promising effects. But if you dig into the details of the working paper, by scholars at the German Institute for Economic Research, you find that with careful controls, the estimated effect on actual financial choices is also vanishingly small (with zero being in the range of possible effects).
The author also correctly points out that awareness of a topic, on its own, has very little impact on changing behavior, and posits that the reason personal finance teachings in schools are so ineffective is because,
The curriculum of most financial-literacy programs don’t match up with the economic realities and actual financial choices many Americans face.
I think that is true, but I will take it a step further: most areas of personal finance are largely irrelevant to high school students because they have little reason to care about personal finance at that stage of their lives. And how many are going to remember the teachings years or even decades later? Unless you’re in a field of work that demands it, how much calculus can you recall from high school? How much organic chemistry? Why should we expect personal finance to be any different?
I’ve noticed when people learn that I am a personal finance writer (and hopefully an educator at times), and conversations about personal finance topics ensue, I usually am underwhelmed with the interest levels and outcomes of those conversations. In fact, people are much more interested in the fact that I am a writer than any personal finance specifics I may delve in to. I think that there is a clear reason for that: at any given moment, a person needs to be interested in the topic in order for it to resonate and stick.
Just think about how much easier it is to learn and absorb a particular topic when you are intensely interested in it at that moment. How often did your passion to learn (and retain) topics in school curriculum match your passion to learn and retain topics when you set your own curriculum outside of school?
When people come to me with specific questions about a topic that is top of mind for them at a given moment, they are so much more engaged and receptive than if I am just riffing on whatever I’m most interested in at a given moment, aka “Personal Finance 101, According to G.E.”. This is particularly true if they aren’t really interested in personal finance to begin with. That’s why I’ve stopped bringing up personal finance topics in conversation.
One of the beautiful things about writing for a personal finance website over a number of years is that the archives of the site often end up on search results pages, where an eager-to-learn student can type in their question and find a relevant match, and then dig in to the content. And the site itself has its own search function.
If I were to mandate that every high schooler read this site from start-to-finish (or any personal finance content) when personal finance is the last thing on their minds, how much of it would stick 10 or 20 years from now?
As I’ve learned over the years and as research points to, it is clear to me that teaching personal finance in high school classrooms is not quite the silver bullet for adult financial success that I once thought it could be.
Personal Finance in Schools Discussion:
- Should personal finance be taught in schools?
- If so, what would you recommend be taught. And why?
- If not, why not?