High school graduates will soon face the challenges of finding a job, paying bills and taxes, finding a place to live and navigating credit cards, bank accounts, mortgages, student loans and more. Some teenagers face these burdens even before they graduate because they have to help provide for their families. Managing money is daunting at any age, but it’s especially difficult when one is starting out. Losing even a little money early on to fees, fines or bad investments can be crippling, and a poor credit rating can stick around and hurt a young person for years.
Fewer than 1 in 4 high school students are required to take a personal finance course before graduation, according to Next Gen Personal Finance, which assesses high school curriculums and advocates for all students to have access to basic money education by 2025. The situation is even worse in many schools that are predominantly non-White and lower-income. Only about 1 in 20 Black and Brown students have a chance to take a personal finance class before graduation unless they live in a state that offers it to everyone, the organization found.
Critics of these types of programs argue they are a Band-Aid that hides the deeper problems in the U.S. financial industry where lower-income families and people of color are often preyed upon with high-fee products and, in some cases, face outright discrimination in accessing loans and other basic services. Personal finance classes are not a magic cure. But they should go hand in hand with efforts to reform the banking system to make it fairer for all. Giving young people a basic education in how the financial system works isn’t just about helping them avoid the worst options; it’s about helping them pick the best path.
Similarly, those who argue that all students need is a basic understanding of mathematics and compound interest are naive. Being savvy at personal finance today is as much about knowing how to navigate paperwork and legal terms as it is about basic math. Customers have to pick between different bank accounts and fee structures, different loan types and traditional banks vs. non-bank lenders. The recent surge in “buy now, pay later” options at many stores is yet another reminder of how quickly old ideas can be repackaged for the digital age and catch consumers off-guard. And then there’s the rise of bitcoin and other cryptocurrencies.
The fact that Michigan’s bill passed overwhelmingly highlights how this is a rare bipartisan issue. We are glad to see Virginia is one of the top-ranked states for personal finance education, according to Next Gen Personal Finance. Maryland is ranked in the middle, and D.C. is sadly ranked 49th. Personal finance should be as core to a high school education as Shakespeare and algebra.