Last week, Florida became the latest state to mandate a financial literacy course as a requirement for graduation from a public high school.
It’s part of a trend that has more than 50 personal finance education bills under consideration in 26 states, according to Next Gen Personal Finance, a nonprofit organization that tracks the legislation.
There is conflicting information on just how widespread school-based financial literacy efforts are — a lot of it lies in the difference between courses required to get your diploma versus classes that school districts are required to offer so that students have an option to take them — but it’s safe to say that seven states already require personal finance courses in high school, and an additional 20 have some sort of personal-finance education in their curriculum.
All of these efforts are important progress toward giving youngsters vital life skills and information. In general, they should be praised. They are the product of good intentions, and they provide solid, useful information. They are noncontroversial; at a time when Americans can argue about what constitutes history and what should be taught in school, no one is sniping over the idea that children need to know about such concepts as inflation, compounding, budgeting, taxes, investing and more. In general, financial literacy bills have widespread bipartisan support.
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Unfortunately, the impact of these courses is severely limited. There is little evidence that receiving financial literacy information in high school affects how those students handle their finances as adults.
Sadly, America’s financial literacy problem will not be solved by legislation.
High school is both too late and too early for that.
It’s too late because children become consumers almost as soon as they can talk; long before they pay for anything, they impact household purchasing patterns. Moreover, even in families with good financial habits, the kids often pick up bad behaviors because they don’t yet understand how money works.
They see mom getting cash from a machine, without ever seeing money go into a bank account; they see credit cards used for everything, without knowing that the bills arrive at the end of the month. They see parents work, but don’t understand that the job is responsible for the money powering the house.
And that doesn’t even consider the “buy, buy, buy” messaging that underlies social media.
By the time they get to high school, kids not only have a lot of misconceptions about money, they also have certain behaviors locked down. Consider senior citizens who were “children of the Depression” and who learned frugality or who scrap to keep every possession — even after it loses its value — …….