Many of us don’t learn to manage our money until we are faced with our first real financial decision, like renting an apartment, applying for a credit card, or buying a car. But what if you instead learn budgeting or credit scores in the low-stakes environment of a classroom? It might not sound like fun, but at least it’s more convenient than trigonometry.
Financial literacy hasn’t always been a priority in schools, but that is changing. The number of states requiring personal finance education in schools has more than doubled over the past decade. Since the Great Recession, increasing student debt and advocacy efforts, more and more people are realizing the importance of educating themselves about money.
Now, because of the pandemic, educators say there has never been so much interest in the topic from students and parents. This year alone, lawmakers in more than 20 states have introduced bills to add personal finance classes to high schools.
STATES SHAPE THE WAY OF TEACHING FINANCE
States generally dictate how personal finance is taught in schools. According to a study released in April by Carly Urban, associate professor of economics at Montana State University, twenty-two states required some form of personal finance education in high schools for the 2020 academic year- 21. The benefits of teaching high school students basic personal finance concepts include better credit scores and lower delinquency rates on adult debt, according to research by Urban and others.
But personal finance education requirements vary. Some states require that a course be offered as an option in high schools. Others allow personal finance concepts to be incorporated into larger subjects such as economics or math. When a stand-alone personal finance course is offered, the curriculum may be out of date, which may defeat the goal of teaching teens real-world skills.
“Teaching young people how to write a check is not enough in a world of Venmo,” a money transfer app, says Tim Ranzetta, co-founder of Next Gen Personal Finance, an organization based in Palo Alto, Calif. , which offers a free program. and the professional development of personal finance teachers nationwide. Next Gen advocates that personal finance be offered as a compulsory stand-alone course for an entire semester.
Urban says the most important concepts students need to understand are how credit scores and credit reports work, how to compare financial products like loans, and how to budget that balances saving, paying off debt. and expense management.
PANDEMIC MAKES MONEY SPEAK EASIER
Before the pandemic, personal finance classes were often led by teachers who had financial problems and realized the importance of teaching children about their mistakes, Urban says.
That’s how it turned out for Renee Nelson, deputy head of the math department at KIPP NYC College Prep, a charter school in the Bronx. Nelson was trying to pay off her credit card debt and improve her profile enough to buy a home when she started sharing her journey with students. Seeing their interest in the subject, Nelson presented a personal finance course that students can take to earn college credit as well as workshops for parents.
Teachers say the pandemic brought discussions about money to the fore because everyone was facing a crisis.
“It provided real world keys into the system, things you wouldn’t expect that can turn your plans upside down,” says William Joy, marketing and personal finance instructor at Lucy Garrett Beckham High School in Mount. Pleasant, in the south. Caroline. Joy said he talked about examples of budgeting in the classroom, gave students a fixed salary, and had them allotted money to various expenses. “So I would say, ‘Oh-oh, the pandemic has hit – you’re earning half the income now, how are you going to spend the money? “”
Outside of the classroom, money can be a taboo subject. But the past year has given families more time together and a chance to talk about it openly because many parents have lost their jobs or have seen their incomes decline, says Gregg Murset, father of six, certified financial planner and founder and CEO of BusyKid, an app that teaches kids about money.
Educators say the pandemic has also spurred student interest in how to save, why people invest in stocks, and how cryptocurrency works.
FINANCIAL LITERACY IS NOT A BALL OF MONEY
Financial education is useful, but teachers realize that it does not address the consequences of systemic racism and injustice. This is part of the lesson they want to leave with the students.
Nelson’s students are black and Hispanic, live in low-rental housing, and are sometimes the first members of their family to attend college. During the 2020 Social Justice Marches, Nelson says his students witnessed riots and picketing outside their doorstep and asked their questions about it in class. She took the opportunity to teach them how decades of discrimination led to economic inequality and how they could get involved in efforts to drive long-term change.
“Most of them don’t really know why their families are in this constant cycle of poverty,” Nelson says. “It was a great way to understand why there are all these issues in our community with money.”
This column was provided to The Associated Press by the NerdWallet personal finance website. Amrita Jayakumar is a writer at NerdWallet. Email: [email protected] Twitter: @ajbombay.