We would never let a teenager drive a car without getting training, but we allow young people to borrow money for college, obtain credit cards and invest their money with little or no financial training.
Surveys have repeatedly shown that teenagers possess very little knowledge about personal finance. You can blame some of the financial illiteracy problem on high schools.
The Center for Literacy examined the financial literacy instruction – or lack of it – at high schools in all 50 states. Only 40% of states received a grade of “B” or higher.
It’s easy to see why personal finance is neglected when school districts are focused on making sure that students pass high-stakes standardized tests that begin at an early age.
In the report, only the following seven states earned an “A” grade:
You can see how all the states fared in the color-coded map below:
The states that earned an “A” require a stand-alone personal finance course in high school or require that personal finance topics be taught as part of a mandatory course and the student’s personal financial knowledge is assessed.
The states that flunked have few, if any, requirements for personal finance education in high school.
You can learn more about the report’s findings and methodology by reading it here: 2103 National Report Card on State Efforts to Improve Financial Literacy in High Schools.
Don’t rely on school alone to teach your children to learn how to manage money. If you don’t provide them with basic personal finance skills at an early age, they will likely learn their financial lessons through hard experiences.
A recent publication from Vanguard in the Resources section of our website provides excellent guidance for parents when teaching their children about money.
If your child’s school does not have a financial literacy program, encourage it to partner with an outside organization to teach these important skills.
Junior Achievement, for example, provides volunteer-delivered programs for kindergarten through 12th grade students to foster work-readiness, entrepreneurship, and financial literacy. Junior Achievement’s experiential learning programs touched more than 4.2 million U.S. students in over 183,000 classrooms during 2011-2012.
More information about Junior Achievement is available at www.juniorachievement.org.