Working Financial Literacy in With the Three R's
by Tara Siegel Bernard
Most Americans aren't fluent in the language of money. Yet we're expected to make big financial decisions as early as our teens—Should I take on thousands of dollars of student debt? Should I buy a car?—even though most of us received no formal instruction on financial matters until it was too late.
While no course in personal finance could have prevented many Americans from getting caught up in the housing bubble1, it's clear that most of us need some help, preferably starting when we're still in school. And I'm not just talking about learning to balance your checkbook. It's understanding concepts like the time value of money, risk and reward, and, yes, the importance of savings.
All of this raises the question: What's happening inside our classrooms? And how many schools even broach the topic? As it turns out, for a country that prizes personal responsibility, we're doing very little.
"We need to teach the basics of economics and finances so people can make financial decisions in a changing world," said Annamaria Lusardi, economics professor at Dartmouth College and a research associate at the National Bureau of Economic Research. "It's the compounding of interest2, the problem of inflation3. These are the principles. And these are really scientific topics."
While more states are beginning to require some sort of personal finance instruction, there aren't enough that do, financial literacy experts say, and there is little consistency in the quality of the education. Just 13 states require students to take a personal finance course or include the subject in an economics course before they graduate from high school, up from seven states in 2007, according to the Council for Economic Education. Meanwhile, 34 states (including those 13) have personal finance within their curriculum guidelines, up from 28 states in 2007. . . .
But that hasn't stopped enterprising teachers...