Teaching Dollars and Cents: Should ‘Financial Literacy’ Be Part of School Curricula?
With topics such as STEM, Common Core, and standardized test scores dominating the news in the education world, Dr. Allen Cox believes another issue is far more urgent: how many students can read a credit score or balance a checkbook.
If Cox had his way, kindergartners nationwide would learn about lending and interest rates, middle schoolers would get lessons on keeping a household budget, and high schoolers wouldn’t graduate without a tutorial on college loans and preserving personal wealth.
It won’t surprise you that Cox is the managing director of the Maryland Coalition for Financial Literacy, a nonprofit advocacy group. His organization’s mission is pretty direct: ensure that lessons on personal finance and the consequences of bad decisions are embedded in school curricula nationwide.
What is surprising, however, is Cox’s sense of urgency: “We’re continuing our mission because we see the need.” He’s got ample evidence backing him up.
The Organisation for Economic Co-operation and Development released a report last month showing that among 18 countries, American 15-year-olds scored in the middle of the pack on financial literacy—how to balance a checkbook, manage a budget, or use and maintain a credit card—compared with their global peers. Just 9 percent of American students scored in the high-proficiency range, compared with 43 percent of students in China, including the city of Shanghai, which had the top scores. Further, according to the report, 80 percent of U.S. students couldn’t properly analyze a basic invoice.
Need more evidence? Consider checking accounts, Cox says, which have become more complex than they were 10 years ago—think checking accounts manageable on an iPhone or products such as overdraft protection and fee-free ATM cards. Keep in mind the global financial meltdown, he adds, triggered in part by home owners who took on debt they couldn’t afford, and the student-loan debt crisis looming on the horizon.
The decline in financial literacy “can be traced back to the fact that financial decision making in the last decade or so is so complex” that many adults can’t figure it out, Cox says. Meanwhile, debt collection and bankruptcy laws all have changed, creating a financial landscape in which it’s easier to make poor decisions.
At the same time, Cox notes, many parents don’t like talking to their children about money, a discomfort that poses the threat of raising another generation susceptible to risky loans—and potentially another economic meltdown.
The solution: Teach finance at every grade level, starting in kindergarten. While many states include the basics in a “life skills” curriculum, Cox says, just 17 states use a more extensive curriculum and make it mandatory for graduation, and some teachers aren’t financially literate enough to effectively teach it to their students. The Maryland Coalition for Financial Literacy has a curriculum that includes teacher training.
Organized around six principles—economic decision making, earning a living, financial management, credit and debt, saving and investing, and preserving wealth—the lessons begin in elementary school, Cox explains. Besides teaching students the value of coins and currency, they also learn the fundamentals of managing money.
“We start with real basic stuff in elementary school: ‘I just got a dollar for helping my mom with the dishes. What are some of my choices to spend it?’ ” he says. “At the middle school level it becomes more sophisticated—how to make a budget—and more sophisticated again in high school.”
By the time students get to high school, Cox says, they’re learning about what jobs pay the highest incomes; they’re learning about identity theft or using a mock bank account to make and track hypothetical Wall Street investments. “We do a lot of case studies. We use cartoons at the elementary school level; we use YouTube in high school,” Cox says.
Implementing a standard financial curriculum nationwide has been challenging because of the variety, Cox explains. In Pennsylvania, for example, the school system has around 500 individual districts, while in Maryland there are just 24 districts—a much easier sell for a financial literacy curriculum.
Some systems in other states have been resistant, Cox says, but “it becomes a matter of prioritizing from the top down. Schools have other priorities. They think those priorities take precedent.”
Yet, he says, “we would argue that it’s right up there with reading, writing, and arithmetic. You have to keep up with it.”