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A growing number of states are requiring students to study money matters in high school, the Council for Economic Education found, reflecting a broader realization that “people are responsible for their own financial future,” the head of the group said.
High school students in 21 states must now take a personal finance course in order to graduate, the nonprofit council reported this week, a net gain of four states since its last study two years ago.
Five states — Iowa, Kentucky, Mississippi, Ohio and South Carolina — added the prerequisite. One state, Florida, dropped its requirement.
Nan J. Morrison, the council’s president and chief executive, said she was heartened by the overall findings. The council promotes economic and personal finance education in kindergarten through high school. Personal finance classes typically cover topics like budgeting, saving, credit scores, the cost of borrowing, interest rates and paying for college.
Growing interest in financial education, Ms. Morrison said, is driven by concern about student debt, as well as the rise of the gig economy and the shift from employer-provided pensions to market-based retirement accounts.
Recent research suggests that financial literacy is lacking among United States high school students. One in five American 15-year-olds doesn’t understand basic financial concepts, according to the National Center for Education Statistics.
More must be done to improve access to financial education for lower-income students, the council’s report said. It cites research by Next Gen Personal Finance, a nonprofit group that develops courses and funds training for high school teachers, that analyzed course catalogs from 11,000 high schools. The research found that in states without a state-level mandate for personal finance instruction, poor students had far less access to financial education, compared to wealthier students.
Making personal finance instruction mandatory helps to reach students at all socioeconomic levels, advocates say. Teaching lower-income students is especially important, said Tim Ranzetta, founder of Next Gen, in part because their education is likely to also benefit their families.
“If you teach the kids,” he said, “you teach the parents.”
The council’s report also noted variations in the scope of instruction. A stand-alone course taught for at least a semester is the “gold standard” for personal finance in high school, Mr. Ranzetta said. But just seven states meet that measure, the council found; others may offer a course that lasts less than a semester or include the content in other classes.
Here are some questions and answers about high school money classes:
Does personal finance instruction help students make better decisions?
Yes, but the impact varies, depending on details like the amount of instruction time and the topics covered, according to the Consumer Financial Protection Bureau.
“Well-implemented state financial education mandates lead to a clear improvement in financial behaviors,” the bureau found in an analysis published last year.
A recent study from Montana State University, for instance, found that high school students who were required to receive personal finance instruction were more likely to make smarter decisions about paying for college. Students were more likely to choose less expensive financing options, apply for aid and get grants, and less likely to carry credit card balances. It also reduced lower-income students’ need to work while in college, which could help them complete their degrees, according to the study.
Where can my school find information about recommended personal finance courses?
Where can I get help with talking to my teenager about money?
One way to ease into a conversation about spending and budgeting is to use a real situation in your teenager’s life, said Billy Hensley, president and chief executive of the National Endowment for Financial Education, a nonprofit group that funds research to promote financial well-being.
It’s common, for instance, for families to pay for school activities, like sports uniforms, Mr. Hensley said. “That’s a wonderful opportunity to begin a discussion about money,” he said, whether on the drive home from school or around the dinner table.
For tips on getting started, check out federal websites like those from the Department of Health and Human Services, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation.
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