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.
And:
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?
Related Posts:
I do believe personal finance should be taught in schools as a supplement to personal finance habits children learn from their parents at home. School lessons are a great reinforcement for kids to learn about personal finance but they may not remember what they learned as adults. Children are more likely to remember good money habits when taught at home because parents use a combination of visual, audio and kenisthetic learning which helps children to retain and apply what they learned later in life.
I agree on the parental influence. Parents have a lot more ability to make it personal and connected to real life.
Interest, desire, and readiness to change are essential. I have often said that moving from “You can’t MAKE me!” to “You can’t STOP me” is the real catylyst for positive change, whether the goal is getting physically fit, financially fit, or vocationally on-the-move. For all but the very, very wealthy, it takes real commitment, focus on details, and SACRIFICE to create a nest egg large enough to provide genuine financual security. And that security is predicated not just on the size of the nest egg but primarily the ability to control spending. Neither is an overnight proposition. My husband and I are now retired and we do have, I believe, sufficient resources to last our lifetime—even if that lifetime is unexpectedly long. We both had decent jobs. That said, we adhered to a standard of living much lower than our peers. Think holding low-priced cars for a decade or more. Modest house. Minimal dining out and lots of home cooking. Two out-of-state major vacations in the first 20 years of our marriage. (We bought a tiny cabin on a lake and THAT was our vacation year after year.) And, perhaps, more important that all of the above: taking care of what we did have. Repairing not replacing the old clunker. Squeezing another two years out of our old computer. Nurturing our marriage and our children with many cheap camping trips, library usage, dinner together every single night. Divorce is expensive. New cars are costly. Fancy homes require more furniture and bigger property taxes. We are very comfortable and secure at this moment in time. We have ENOUGH. But in those early years, we felt we had to watch every penny. Our financial literacy was forged not by formal classes but a firm grasp on goals we bought into with a serious sense of “You can’t stop me!” A good (rich!) friend offered succinct advice: “Wealth will be yours if you don’t change cars, houses, or spouses.” And, I might add,: “If you know what is essential to your happiness” and figure out how to make that happen within the resources you have available. Mindset……not classes.
That is all pretty spot on!
It’s also very difficult to resist the consumer culture that Americans, at least, are born into. We’re saturated with imperatives to buy, buy, buy, and if you’ve grown up with that since childhood, it’s difficult to teach high schoolers that another way is better. The bloated “middle-class” lifestyle is almost enforced by our society, certainly as the norm from which you deviate at your peril.
If students have horrible role model parents/friends/TV stars/etc., getting exposure to a different way of thinking about finances is probably one of the better reasons to teach it, in my view.
I think the best time period to teach these skills to people is when they start paying (almost) all their own bills. Force people enlisting into the military to take a class during basic training or boot camp. Graduating college seniors, with the option to defer if they’re going to grad school (where they must take it during their last semester). During orientation for entry-level jobs for people who enter the workforce out of high school.
Problem is, I don’t see many organizations buying into it and adhering to it unless the government forces them. Let’s say I run a construction company and it takes 3 months to train someone fresh out of high school, do I really want to spend another two weeks putting someone through finance classes, costing me more money and delaying having a skilled crew member on my team? Or if I’m a college admin, would I want to force students to take one more additional class, possibly making them swallow another couple thousand dollars in expenses and/or getting rid of another required class to make room?
It’s certainly valuable knowledge, but it’s on employers and universities to impart said knowledge. And doing so would be quite a hassle, and possibly not even in their interest to do so (though I can see the argument that it is).
I think it would be wise for corporations to offer financial education as a perk as well. Particularly to recent grads as they now have money for the first time.
Think about how much stress paycheck-to-paycheck workers have. It cannot be good for productivity, client relationships, culture, etc. And financially stressed workers can get involved in nefarious activity at work at times.
I think this underscores how education on-demand is really preferable in the vast majority of life skills, whereas main topic courses where consistent progression really only makes sense in core curriculum areas (humanities, math, science, etc.)
I do think how-to focused infographic-heavy introductory into detailed (even if it’s a breakout of links to other articles) is probably the optimal answer, since this is an area where once people figure out there is a knowledge deficit they want to cram just enough information to get the answer they feel they need, making it accessible is going to pay dividends.
All good points.
I would tend to think that personal finance classes do not address the root of the problem directly enough. Instead of teaching frugality and resistance to cultural temptation, they tend to focus on far less controversial aspects of financial literacy such as basics of budgeting and financial product shopping. While indeed very important and applicable, this knowledge is likely to be discarded and forgotten, like most other school subjects, if the great dangers of excess consumerism and structural problems within society are not touched on. It is certainly debatable whether or not it is the job of a school curriculum to teach these values, as they are highly subjective and political. However, without them, financial knowledge is likely to have very little impact in influencing actual purchasing/saving decisions in later life.
In general there should be a course on PF. But PF does not benefit schools/colleges/employers who need people to work for their money and study hard, get into n expensive college, get that school debt ,to get a paying job to pay for that school debt and any credit card debt along the way. instead of using their creative side to start a business or investment goals. easier said than done, but at that age not everyone was given that option/vision.
How much help would it be though? probably better than not having it. I think parents money habits and close friends and family spending habits will affect the child more. But knowledge is power..
I stopped reading when the article staying PF taught in schools is “a waste of time” was written by Washington Post.. Jeffy Bezzos owned. who owns Amazon. a huge, consumerismcentric storefront to spend as much money at any hour of the day .. especially when I’m half asleep and getting that blue-lit phone addiction and next thing I know I spent $100 on random stuff I don’t need.. YOLO and who cares about debt..
now times that mentality by the millions.
I definitely think PF should be taught in schools. I wish it had been taught at mine, maybe I would have avoided the debt hole I fell into and then had to dig myself out of. Real life scenarios on what to do with income – in terms of budgeting, saving, consequences of debt… Maybe a crash course on 401Ks. I know when I first started my “real” job I had no idea what I 401K was, thankfully my Dad was around to tell me to opt-in and at least get the company match. Not everyone is so lucky.
Thanks for the information. Quick finance question here can anyone help?
I’m studying in BYU currently and saw this post on the university website. It’s about credit cards for students.
I’ve been using credit cards for a few months now and it’s getting out of control!
What is your opinion, should university students be getting credit cards?!
Please write a post about this!