Emerging from the pandemic, we must teach personal finance

The effects on personal finance knowledge are similar to those found in studies of successful math and reading interventions, and the effects on behaviors are similar to anti-smoking and energy conservation efforts
By: | June 16, 2020
Credit: Neonbrand via Unsplash

The lack of personal finance education in American high schools is tragic, and the most important course most of us have never taken is about to become all the more critical as we emerge from the pandemic.

Tim Ranzetta is co-founder of Next Gen Personal Finance, a Palo Alto, Calif., non-profit that provides free curriculum and professional development for high school personal finance teachers.

Reading, writing and ‘rithmetic have been staples of American education and essential to living and working. So no one questions the need to teach these subjects in school.

In fact, most American high schools require four years of English and three years each of science and history, all of which require reading and writing skills. And high schools also require four years of math.

Interestingly, personal finance used to be taught in schools. Grainy videos like this one from the 1940s provide evidence that educators once felt this subject was imperative to consider oneself “educated.” Something happened along the way.


Read: In-person or remote learning? Let each family decide


Now, the need for personal finance education has become more urgent, as our world becomes more financially complex, and families struggle with credit debt, emergency funds, and retirement savings.

So, why are only five states in the U.S. equipping students with the financial skills they need by ensuring that ALL students take a semester-long personal finance course? Already crowded with courses and lacking trained teachers, naysayers will often question the value of such a course too. They’ll point to some out-of-date study and even argue that high school students don’t make enough financial decisions for a course like this to stick.

Research on finance education has found its positive effects in increasing credit scores, reducing loan default rates, increasing student loan repayment rates, reducing the usage of payday loans, and increasing bank account ownership.

A visit to a high school classroom led by one of the thousands of teachers who use our curriculum or attend our virtual training sessions would dispel these misconceptions.

Even better, more and more research confirms what teachers have known for years – finance education works.  A new meta-analysis finds that financial education improves both financial knowledge and financial behaviors. In this study, researchers from the U.S. and abroad examined personal finance programs in 33 countries and their effects on more than 160,000 students.

The effects on personal finance knowledge are similar to those found in studies of successful math and reading interventions, and the effects on behaviors are similar to anti-smoking and energy conservation efforts.

Other recent research on finance education has found its positive effects in increasing credit scores, reducing loan default rates, increasing student loan repayment rates, reducing the usage of payday loans, and increasing bank account ownership.

So, how are we doing as a nation?

We are number six in this study of 15 countries, behind Estonia and Poland. The aspiration to be No. 1 has led many sports teams, companies, and individuals to achieve amazing things. Let’s commit this moment that we will lead the world in financial education within the next decade.

To get there, we will need to increase access. Last month, we commissioned a study by Montana State University to analyze access to financial education on a school-by-school basis. After analyzing more than 8,000 high school course catalogs, they found that only 1 in 11 U.S. high schoolers will cross their graduation stage having taken a one-semester personal finance course.

If we are serious about being no. 1, state leaders have to get on board. They should follow the lead of teacher advocates across the country. These passionate and committed educators have succeeded in getting more than 1,000 high schools to ensure all students receive finance education.

We have provided $10,000 grants to 46 schools that recently made this commitment through our Gold Standard Challenge grant program. Their stories inspire us and other teacher advocates.


Read: Hundreds of free K-12 resources during coronavirus 


One exciting new development can be found in Prince George’s County, Maryland where the 19th largest school district in the U.S. committed to ensuring all students take a one-semester personal finance course. As successful as this grassroots teacher movement has been, the urgency of the matter requires faster action and a commitment from leaders in state capitols too.

The pandemic should be the ultimate wake-up call for legislators. As the health crisis subsides and the focus shifts to economic recovery, state leaders must commit to improving the financial capability of the next generation coming of age in these challenging times.

The financial struggles experienced in millions of households today are not of their own doing. Millions of people have lost jobs through no fault of their own. It also was not their fault that in high school they didn’t learn about auto loans, credit cards, college loans, and many other financial issues.

Whatever the new normal looks like, states must support high schools in making personal finance an integral part of the curriculum. They must provide the resources to hire and train educators to deliver these essential lessons.

No small task, to be sure. My hope is that this latest study, combined with the economic challenges families in America face, will galvanize policymakers and school officials to act now. Let’s aspire to ensure that all students leave high school with the financial skills and behaviors they need to thrive in the future.


Tim Ranzetta is co-founder of Next Gen Personal Finance, a Palo Alto, Calif., non-profit that provides free curriculum and professional development for high school personal finance teachers.