As of 2017, 78% of U.S. workers were living paycheck to paycheck, according to a CareerBuilder survey. What’s more, the U.S. financial literacy rate is declining. A study by the FINRA Investor Education Foundation found that when asked to answer five financial literacy questions, those ages 18 to 34 saw the sharpest decline (13%) in financial understanding between 2009 and 2018. Compare this finding to the 3% decrease in financial literacy for those ages 55 and up, and these findings are startling.
The bulk of the problem? Financial literacy is largely absent in our schools.
Financial Education in Schools
While many states have seen slight improvement in their financial literacy requirements, majority of U.S. schools are still lacking. The Council for Economic Exchange found that as of 2020,
- 21 states require that high school students take a course in personal finance, an increase of 4 states from 2018, and
- 25 states require that high school students take a course in economics, an increase of 3 states from 2018.
Five states and Washington, D.C., however, still don’t include any kind of personal finance requirement in their standards.
These findings are concerning, especially when considering that the financial literacy rate among U.S. adults is 57%, according to an article from InvestmentNews. Author Greg Iacurci says, “When it comes to being financially literate, Americans fall woefully short,” ranking number 14 “when measuring the proportion of adults in the country who are financially literate. To put that into perspective: the U.S. adult financial literacy level…is only slightly higher than that of Botswana, whose economy is 1,127% smaller.”
A lack of financial understanding can have serious implications, leading to poor financial decisions, skyrocketing debt, and a lack of savings. According to the S&P Global FinLit Survey, “Consumers who fail to understand the concept of interest compounding spend more on transaction fees, run up bigger debts, and incur higher interest rates on loans. They also end up borrowing more and saving less money.”
Teaching financial education in schools can help to equip young people with the skills and knowledge necessary to navigating personal finance well into their adult lives and securing their financial futures. In addition to encouraging the remaining states to require financial and economics course requirements, what can we do to encourage our kids’ financial understanding and set them on the right path to financial wellness?
Financial Literacy Resources for Teens
Luckily, there are plenty of accessible lessons and tools for teens, guaranteed to kickstart their journey to financial literacy. These resources can also serve as an excellent supplement to financial courses in school. Here are 3 of our favorites.
- I Want More Pizza: Real World Money Skills for High School, College, and Beyond by Steve Burkholder – This quick read is excellent for young adults, particularly high schoolers looking to master the basics of personal finance before going off to college. Author Steve Burkholder draws from his own experience as a teen to teach readers the ins and outs of saving and spending, compound growth, investing, student loans, credit cards, and more, all pieces of the pie of money management. Each chapter ends with review questions, ensuring teens stay engaged and comprehend the important topics. You can pick up a copy for your teen here.
- “Money with Mak and G” Podcast – 11-year-old twins Mak and G take to the studio to bring kids and their parents this educational finance podcast. The episodes are short, straight to the point, and very timely, hitting on hot topics, like investing and the stock market, maintaining a positive money mindset, and current events, like President Biden’s plans to cancel student debt and the craze that is cryptocurrency. This podcast, which you can find wherever you listen to podcasts, such as Spotify and Apple Podcasts, is perfect for younger teens and tweens.
- gohenry – This debit card and app duo offers kids and teens a budgeting tool and spending plan and makes managing children’s allowances easier for parents. Through the app and online, parents can set up automatic weekly allowances, set one-time and weekly spending limits, and encourage their children to form good money habits through various tasks, goals, and giving opportunities. Each kid receives their own debit card and is limited to the money on the card. If you’re interested, the first month is free. After that, gohenry costs $3.99 per child per month (limited to four child accounts). You can learn more and sign up here.
If you’re looking for resources targeting younger kids, head on over to our piece on money lessons and tools for kids.
As the U.S. financial literacy rate declines and many states still lack financial literacy requirements in schools, it’s important to jumpstart our teens’ financial understanding to set them up for future financial success. Use these resources to kickstart your teen’s financial journey.