Americans Say They Need a Finance Class
For all of Americans’ financial shortcomings, at least we recognize there is a problem.
More than 80 percent of adults believe states should require a personal finance class in high school and wish they’d taken one themselves, according to a March survey by the National Endowment for Financial Education (NEFE).
Rarely do we see that much agreement on anything, and it indicates people don’t always feel confident about the choices they are making. A famous questionnaire takes the measure of their insecurity: less than a third of people surveyed correctly answered three basic questions about interest rates, inflation, and investment risk.
Of course, people over 60 have more experience, and 92 percent of them think financial education is important. But 79 percent of 18- to 29-year-olds also feel strongly that a financial class should be required for a high school degree. And both men and women agree.
Unfortunately, there hasn’t been much agreement on whether financial education actually does much good. NEFE would like to put forward some new evidence that it does work.
NEFE asked four economists to do a meta-analysis of 76 studies in 33 countries that tested the effectiveness of a wide variety of financial lessons at all ages. In one study, elementary students exhibited more self control after hearing stories that helped them visualize the future. One story was about a girl who explored, through time travel, a choice between buying things now or saving up for a bike. The researchers in another study described workers as effectively “flipping a coin” to decide between a 401(k)-style or Roth retirement account. But after watching videos about the accounts’ different tax consequences, they answered more questions about the accounts correctly.
The researchers’ conclusion: “Financial education improves financial knowledge and financial behaviors.”
NEFE also noted that the researchers had a lot of new material to work with, because the frequency of effectiveness studies on financial education surged to more than 600 in 2020, dwarfing the roughly 100 studies completed in 2014.
But perhaps proving that financial education is effective is not the best argument for providing it. Perhaps the classes should be offered because people want them and feel they would benefit.
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So a poll from the National Endowment for Financial Education establishes that most adults support financial education mandates. Calls to mind an old F Minus comic: A new poll has determined that bacon is one of the healthiest foods you can eat.
My first year of teaching business subjects in a High School, there was a finance course (not sure of the title). I do believe it was a required course. It covered checking accounts, how to use them and track transactions. How overdraws can be very costly. Dealing with loans and how interest rates differences can impact the cost of a loan, etc. Buying an automobile. How to buy insurance and learn the differences.
Now if this was used by the students, no one will ever know. But I thought it was very important information as students move into their adult lives.
And yes I do agree that this type of information/courses should be back in the schools.
Ask a silly question and you get a silly answer. Time is a scarce resource. Financial education classes have to take the place of something else in the school timetable. The interviewer never specified what should get the chop? You might get very different responses depending on whether it is calculus or grievance studies.
So this is difficult to accomplish in US society, mainly because the federal government wants more people to be dependent on the government. This way they control society more than if citizens are financially independent.
Since financial literacy education is now finally being adopted by more than half of the states, it can be implemented if the teachers are trained first in this important area. It is important enough to replace one hour of study hall if no other topics are appropriate to replace.
Want to influence young Americans to take action to improve their performance when it comes to everyday financial decision-making? Don’t forget to invite their parents to the education as well.
Importantly, remember to focus as much on dreams as on the basics (checking accounts, debt, etc.) My most successful educational efforts with young adults (in a benefits orientation setting) was to prompt them to dream, asking them, “Will you be a 401k middle class millionaire, someday?”