The rapper 21 Savage is starting a financial literacy program in Atlanta. Why isn’t the rest of America doing that?
Approaching my senior year in high school, the one thing I can remember being taught about personal finance was how to write a check. I learned that in fourth grade. To be honest, I’ve forgotten.
Financial literacy for students means having the knowledge to make financially prudent decisions. It means knowing how loans (especially student) work, along with credit/debit cards, day-to-day money management, savings, and investing for the future.
Only 21 states require high schoolers to take a course with some component of personal finance at a time when they approach the most consequential financial decisions of their lives. Although scholarly research has demonstrated the efficacy of at least some of these curricula, California is one of six states with no personal finance in its state standards.
A long-established belief about financial literacy that contributes to this is that it’s for parents to teach, not schools. Yet when I polled a few of my friends, none had even considered talking to their parents about money. “Dude, I don’t know, I’ll learn it at some point.” But when? By trial and error? With college loans? A 2017 T. Rowe Price survey found 69% of parents had “some reluctance” to discuss money with their children.
In my experience, kids want to learn financial literacy. They’re just not given the opportunity. After leading multiple financial literacy workshops for foster care and other underserved teenagers around the Bay Area over the last three years, I’ve found that children are eager to learn these topics, though it’s always their first time being introduced to them. The range of money-related things they’ll soon have to handle always shocks them.
Now most students my age are spending the next year figuring out where they’re going to college. Almost all college education comes at a cost — but students don’t have realistic expectations of that. A 2017 study found that 38% of students thought they were going to use student loans, while 60% ended up doing so. If not prepared, these loans will likely leave us with debt we’re relentlessly trying to pay off every year through our 40s.
Financial education is even more relevant in the current situation. The coronavirus pandemic has led to a record unemployment rate across the United States. People need savings to ride out unemployment, however, a 2018 Federal Reserve study found that “only about 40% of (all U.S.) families have liquid savings equivalent to at least three months of expenses.”
Of course, limited incomes are a predominant factor, but financial literacy also matters. A Western Michigan study found a correlation between adults’ low income and low financial knowledge. The study found low-income participants knew the least about savings, averaging 47% on a test. On top of lower incomes, lack of financial literacy knowledge may contribute to lower savings and exacerbate economic inequality.
Meanwhile, my generation is increasingly tech-dependent. The ease of using financial platforms contributes to a sense of disconnect from money’s value — typically, it’s psychologically easier for one to send money through an app or the stock market versus pulling $50 out of a wallet — and this disconnect leads to improper budgeting and financial decisions.
Financial literacy allows for better understanding of one’s situation and gives students skills to plan and achieve financial goals. If you’re an adult, you can take the chance to educate students and advocate for change in the standards. If you’re a student, start educating yourselves (see here for some resources to begin).
Parth Asawa is a rising senior at Monta Vista High School in Cupertino. He is the director of the Financial Literacy Introduction Program (FLIP) of the Youth Economics Initiative, and has led financial workshops for foster care teens and created a financial literacy elective at a summer program for low-income minorities.