In 2009, the Virginia Board of Education (VBOE) unanimously approved a one-credit course in economics and personal finance, as a requirement for graduating from high school. The approval of this long-awaited requirement was a bold move by the VBOE to help ensure the future fiscal responsibility of the commonwealth’s students. The requirement went into effect for the freshman class that began high school in the fall of 2011, meaning that the senior class of 2016 will be the second to graduate under this requirement.
With Gov. Terry McAuliffe issuing his annual proclamation to declare April Financial Literacy Month in Virginia, we’re provided with an excellent opportunity to reflect on the importance of ensuring that our students leave high school with increased exposure to the principles of responsible money management and the encouragement to become financially independent future business leaders.
You’d be hard-pressed to open the newspaper, turn on the evening news or listen to the radio these days without hearing about our country’s financial woes. In total, American consumers owe $733 billion in credit card debt and $1.23 trillion in student loans, and last year over 800,000 Americans filed for bankruptcy. In addition, 60 percent of U.S. adults say they don’t keep close track of their spending, 34 percent say they have no non-retirement savings, and 41 percent give themselves a grade of C, D, or F on their knowledge of personal finance.
As a country, we seem to acknowledge that our teenagers’ understanding of personal finance is also lacking. Research shows that, globally, the United States has one of the worst opinions of its teens’ money management skills, with 70.5 percent of respondents saying that U.S. teens don’t understand basic money management principles. This appears to begin to manifest itself during the college years, when 37 percent of college students say finances are a significant source of stress and 60 percent say they don’t create a budget.
Given all of these statistics, it’s difficult to argue against the need for our students to become part of a more fiscally responsible generation, with the personal finance requirement being one means to assist in achieving that end. However, some lawmakers have made that very argument, citing implementation hurdles, effectiveness uncertainties and fiscal impact.
We all know that schools are already faced with a full plate of requirements, but prioritizing financial education is critical to students’ lifelong financial stability and success and the long-term stability and success of the Virginia economy as well. The process of implementing any new requirement, especially in the early stages, carries some associated burdens with it. However, the burdens of living in a financially uneducated and debt-ridden society will be much higher.
Anything worth doing is worth doing well, and the personal finance requirement is no exception. It’s not enough to provide education. We must provide effective education. However, to continue to wring our hands at the condition of our economy and, yet, do nothing to take real action, would be shortsighted at best and defeatist at worst. We must start somewhere. For those that argue fiscal impact, there is little doubt that our schools are running on very tight budgets, but to say that we don’t have enough money to teach our children about money seems like something straight out of a Dilbert cartoon.
Through initiatives like the economics and personal finance graduation requirement, students are learning fiscal responsibility and money management skills when it matters most — before they are faced with real-world responsibilities like financial aid and college tuition, credit card debt and consumer spending, and owning their first car or home. It seems that even the students themselves recognize this, with 76 percent of teens reporting that the best time to learn about money management is in kindergarten through high school.
Leaders in government, business, nonprofit and academia must be passionate about financial literacy and committed to educational initiatives that increase the financial knowledge and acumen of our youth. They are the future of our state. We must give them the tools to create a sound financial future for both themselves and our economy as a whole.
Clare K. Levison is a CPA and author of “Frugal Isn’t Cheap: Spend Less, Save More, and Live Better.” Clare has appeared on major radio and television networks across the country discussing personal finance and has also been a contributor to publications such as The Wall Street Journal, USA Today, and U.S. News & World Report. Clare is a national financial literacy spokesperson for the American Institute of Certified Public Accountants (AICPA) and has served as a member of the Virginia Society of Certified Public Accountants (VSCPA) Board of Directors. clarelevison.com
Sources:
http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/
http://www.acainternational.org/creditors-bankruptcy-filings-declined-10-percent-in-2015-37966.aspx
https://www.nfcc.org/wp-content/uploads/2015/04/NFCC_2015_Financial_Literacy_Survey_FINAL.pdf
http://jumpstart.org/assets/files/Making%20the%20Case%202014_2.pdf
http://www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf