In the same way as we don’t let people get in the driver’s seat of a car without proper education, that standard should be held up to students and their financial necessities. A young individual uneducated about the complexities of finance is as dangerous as putting someone with no knowledge in the driver’s seat of a car.
The need for stronger enforcement on financial literacy in schools among Americans of all ages is a widely talked about topic for parents and educators in recent years. Truth be told, financial education needs to be engraved in curriculums starting elementary school. Personal finances shape the world around us and any opportunity you want to seek in the future will involve personal finance. Yet, almost 31% of highschoolers in the United States go to the workforce straight out of high school, and yet they still don’t know basic financial terms. So what is financial literacy and why is it so important today?
To be financially literate in simple terms, is to know how to be financially responsible with the money you have. Financial literacy is as essential as basic writing and arithmetic skills. Studies find that students who did receive a personal finance education in high school are less likely to be a delinquent on credit card payments. However, numerous other studies from prior years show otherwise.
Studies from 2022 conducted by George Washington University aimed at assessing young adults and their literacy with finance. Results showed that respondents only answered about 50 percent of the questions correctly, and only 18 percent of adults were able to answer more than 75 percent of the questions correctly. This struggle in responses also showed a direct correlation. Adults who struggled to answer questions more correctly were more likely to experience extreme financial difficulties, especially during times with an ever-growing volatile market. They also struggled with high levels of debt, lack of savings, and lived paycheck to paycheck. Furthermore, people who tend to perform low on assessments like this were more likely to spend more money than their income, less likely to have a retirement fund, and borrow money from non-banking institutions.
This is not only alarming, but shows that action must be taken. Not only does being financial literate help solve this gap, but it ensures that Americans won’t be taken advantage of. In fact, the issue of financial literacy so widely agreed upon that personal finance has bipartisan support across the aisle. Republican senators and democratic senators from different states have sponsored bills requiring personal finance courses to be a graduation requirement. In fact, during 2021, 38 states ranging from Puerto Rico to Washington D.C. had all instated some variation of a personal finance course as a requirement to graduate high school. In turn, 2022 studies showed that in states like Georgia and Texas student credit scores started to rise dramatically. Starting from 7 points in the first cohort all the way to 27 points by the end of the third cohort, students were finding immense success in these personal finance classes.
And though over years there have been direct success correlations to the installment of these programs, there are also glaring gaps that need study. There is no doubt that financial literacy is a key step towards solving the huge wealth gap in the United States, but there are some important things to acknowledge when tackling such a huge challenge.
America is built on the basis of diversity, therefore any policy put in place that aims to solve any issue must be built to help all diverse crowds. Yet the discussion of things like:
- Ethnicity
- Gender
- Race
- Sexuality
Is largely absent from these studies. And though arguably financial literacy can help any student, it is necessary that the curriculum also address the long historic and economic injustices that minorities have gone through that have perpetuated huge disparities in housing and employment. There needs to be a framework that adapts to the full range of needs of American citizens. One that all can turn to.
FinEmpower is a proud pioneer in this field. Our mission is clear: to ensure that all individuals have access to an inclusive and equitable education. Through the articles and workshops hosted by us, our financial literacy educational framework is built for students across k-12. During your experience with us, you will read and have the opportunity to attend workshops on topics ranging from tackling current economic issues, budgeting, saving, credit, investing, and many more. And most importantly, we deliver on our promise. This framework includes topics on race, gender, sexuality, and more. This is a space where you can talk about your experiences with discrimination in borrowing and employment gaps.
Truth be told, it’s about time we have a wide and adaptive curriculum for financial literacy. Having an honest curriculum that doesn’t discriminate is what will truly shorten the wealth gap in this country and will foster critical thinking and an understanding of the foundational causes of economic disparities. We provide workshops and resources regarding a range of discriminatory practices and how to combat them for Native People, People of Color, and so many more.
While more and more research comes out in the various ways historical discrimination seeps into our economic practices, we must also focus on fixing what we know right now. Being financially literate is a superpower in today’s time. Ultimately, it is the government’s job in ensuring that it passes policies that address the underlying discriminatory disparities in today’s society and to ensure that all Americans are able to make a living, basic enough to sustain a living. Those lines are blurred today, so financial literacy is our key step in getting there.
