It's time for colleges to require mandated financial literacy courses (2024)

FAQs

It's time for colleges to require mandated financial literacy courses? ›

By making financial literacy courses mandatory, colleges can establish a standardized curriculum that covers key financial concepts and skills. This can ensure that all students receive a consistent education from a great program that prepares them for the financial challenges they will face in their lives.

A majority of students feel unprepared to manage money.

An alarming 53% said they were least prepared to manage their money compared to other challenges of going to college. By making a financial literacy class a general education requirement, students could learn to better understand their money.

Providing tools, and sharing knowledge on how to manage money, by providing mandatory school lessons, will help to develop a better financial understanding among younger generations who, in turn, can share their acquired tools and skills, on how to manage their finances, with their parents and others.

Teaching financial literacy at a younger age helps children develop healthy, lifelong financial habits. The main principles of financial literacy include earning, saving, investing, protecting, spending, and borrowing.

Learning about financial literacy is important, as personal finance education provides students with the knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. It's equally as important, however, that this education be offered as early as possible.

In conclusion, financial literacy has both its advantages and disadvantages. On the one hand, being financially literate can help individuals make more informed decisions with their money and avoid debt. On the other hand, financial literacy can also lead to people becoming more materialistic and obsessed with money.

High schools might avoid teaching personal finance due to several reasons, including the perceived lack of relevance to students' current lives, the gap between financial literacy and financial responsibility, and the practical constraints of traditional teaching methods.

AB 2927, a financial literacy bill proposed by Democrat Kevin McCarty of Sacramento, would actually do almost the same thing as the ballot initiative. The bill would require financial literacy as a graduation requirement, although it would go into effect until 2031, a year later than the ballot measure.

Financial literacy can have negative effects on individuals' financial behaviors and attitudes. People with high levels of financial literacy tend to take too many risks, overborrow, and hold naive financial attitudes, which can lead to reckless behavior in certain financial aspects .

Cons of Teaching Financial Literacy in Schools

Since this topic often involves complex math and advanced concepts, it can quickly go over the heads of some students who may not understand the issues being discussed.

Do financial literacy classes help? ›

Incorporating financial literacy education into educational curriculum can equip students with the necessary knowledge and skills to make good financial decisions and secure their future, leading to economic growth and prosperity.

By exposing students to money concepts early on, they can learn – and make mistakes – when the stakes are much lower. Including personal finance in schools is important for another reason as well. While we can hope that these concepts are something that families talk about at home, we know that's not always the case.

Students who take Personal Finance in High School will hopefully save early, remind themselves of compounding interest when paying a credit card bill, and responsibly budget their income, among many of the other concepts introduced that give students an advantage post- graduation with their Personal Finances.

Banking on Knowledge: Financial Literacy Among American College Students. While personal finance is becoming a required course in many American high schools, more than 40 percent of college students are still not equipped with adequate financial literacy knowledge and skills.

Simply put, financial literacy provides students with the tools and knowledge they need to make sound financial decisions. By understanding common budgeting strategies, managing debt properly, and smart borrowing, the student is less likely to become overwhelmed by potential financial concerns while in school.

Financial literacy in the US

The index explores eight functional areas across finance, such as earnings, savings, insuring and comprehending risk. Data from the 2024 index reveals how financial literacy in the US has hovered around 50% for eight consecutive years, with a 2% drop in the past two years.

Individuals with higher financial literacy are more likely to live within their means, have three months' worth of income in an emergency fund and have at least one kind of retirement account, according to the FINRA report. Only 35% of Americans with lower financial literacy rates reported spending less than they earn.