Schools have long tried to impart money management skills to students through a variety of programs: elective classes in partnership with banks and nonprofit groups, after-school programs that teach economic basics and “life-skills” to round out a student’s academic education.
Now a nonprofit promoting financial education, the Council for Economic Education, will be unveiling financial literacy standards next month, pegged to "financial literacy" month. They establish benchmarks for what kids should know about money by the end of 4th, 8th and 12th grade. The group said it will be going state by state to get them implemented.
The lessons include:
- Earning income: Not just collecting a paycheck, but also collecting rent, stock dividends and interest on bonds. It also includes a discussion of the labor market and how education may lead to higher wages.
- Buying goods and services: How to plan, compare, budget and making choices in the marketplace.
- Saving: How to set near- and long-term goals and how time, interest rates and inflation affect savings.
- Using credit: Borrowing options and how credit history helps determine availability of credit and the rate of interest.
- Investing: This includes risk, rates of return and diversification.
- Protecting and insuring: This includes potential loss of health, assets, income and identity, and how behavior affects the cost of insurance.
Florida is already moving in this direction. The state’s Senate committee approved a bill designed to ensure students are prepared to earn a living once their schooling is over.
The legislation – SB 1076, called the Career and Professional Education Act — is really intended to produce graduates with job skills needed in to staff Florida's high-demand fields that are difficult to staff. But it also dictates “financial literacy must be included in high school graduation requirements, as part of required credit in economics, and requires an emphasis on entrepreneurship in the career education and planning course in middle school.”
With millions of students accruing more college loan debt than ever before, do you think it’s a good idea to make kids understand the basics of personal finance? Or, with student test scores well below the national average, should California stick to the basics such as reading, writing and math?