A recession is looming, inflation has skyrocketed, interest rates are rising, and the personal finances of many Americans are at risk. The financial knowledge necessary for students like me to navigate these turbulent times is in short supply, but the demand is high.
The circumstances of the people’s economic struggles are complex and systemic, as are the potential solutions. But there is one simple solution to prepare the next generation for economic maturity: teach financial literacy in high schools.
America’s youth across the country are financially illiterate, and that certainly rings true at my high school in rural Indiana. I’m 16 years old, and two topics are ubiquitous in high school conversations — cars and college. Unfortunately, teenagers are unaware of the financial concepts that affect both of these costs.
We don’t realize that used car prices are affected by, for example, supply and demand. Additionally, we burden ourselves with massive college debt, oblivious to interest rates and opportunity costs. Our uninformed choices about cars and colleges have long-lasting consequences and are only the tip of the iceberg; we do not understand the many financial principles that affect our lives.
The lack of financial knowledge is increasing among young people. More than half of teenagers fail a standardized financial literacy quiz. Moreover, 64% of teenagers earn money at work, but only 31% can keep a bank account. Young people like me unfortunately – and we really regret it – know more about TikTok and Minecraft than money.
“ Financially illiterate youth become uninformed adults with economic struggles.“
Financially illiterate youth become uninformed adults with economic struggles. Most millennials owe more than $100,000 on average, and 61% of adults live paycheck to paycheck. Almost half of those earning over $100,000 also live paycheck to paycheck. These statistics paint a scary picture of the potential future of my generation.
A lack of financial literacy is linked to widespread economic inequality, “the defining challenge of our time,” according to former President Barack Obama. Financial disparities are present in my rural community. Nearly half of students are on free or reduced lunch, an indicator of low income and poverty.
My mother is a first grade teacher in my small town. She recounts the widespread food and housing insecurity experienced by her students, often wanting to take care of them. Shockingly, one third of economic inequality is caused by inequalities in financial literacy, as a ground-breaking report has found.
What can curb economic inequality and its partial root cause, financial illiteracy? The answer is certainly not the parents; 72% do not discuss money with their children, demonstrating the need for financial education outside the home.
Grassroots initiatives are one approach to bridging gaps in financial education. For example, I founded Students Teaching Finance, a student-run non-profit organization. Our organization educates hundreds of K-8 students about the fundamentals of financial literacy. We teach engaging lessons that cover a range of topics, from needs vs. wants for younger students to compound interest and investing for older students, for example.
Although effective, local level initiatives represent a complex solution to a systemic problem. The glaring offender in America’s widespread financial illiteracy is our education system. Independent financial literacy classes are not needed for 77% of high school students. Financial education is a simple mechanism to alleviate the knowledge gap of students and the economic gap in society.
A minority of US states already (or soon will) require financial literacy classes. But this still leaves 11.9 million students behind. If you live in a state that does not require personal finance education — 35 of them — I urge you to engage your school officials and legislators to require financial education.
Financial literacy can be interesting and relevant for high school students. For example, summer salary budgeting lessons are making an impact and we’ll be glad to see our dollars stretch further. Financial literacy education has bipartisan support, but advocacy is needed to implement it.
Although not a panacea, implementing financial literacy education is monetarily and politically profitable. Curriculum changes will systematically teach young people about financial literacy, foster a stronger economy and combat economic inequality.
Money should no longer be a taboo subject, and society cannot afford to ignore the power of financial literacy to impact equality and the economy. Educators and legislators must guarantee through tangible policies that all students learn financial literacy in high school — and we teenagers will thank you for it.
Isaac Hertenstein is a high school student in Greencastle, Ind. He founded Students Teaching Finance (www.studentteachingfinance.org) to increase financial literacy across the country.
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