A recession looms, inflation has skyrocketed, interest rates are rising, and many Americans’ personal finances are in jeopardy. The financial knowledge necessary for students like myself to navigate these turbulent times is in short supply, but the demand is high.
The circumstances of peoples’ economic struggles are complex and systemic, as are the potential solutions. But there is one simple solution to prepare the next generation for economic adulthood: Teach financial literacy in high schools.
America’s youth nationwide are financially illiterate, and this certainly rings true in my rural Indiana high school. I’m a 16-year-old junior, and two topics are ubiquitous in high school conversations — cars and college. Unfortunately, teenagers are unaware of the financial concepts that affect both of these expenses.
We fail to understand that the prices of used vehicles are affected by supply and demand, for example. In addition, we saddle ourselves with massive college debt, unaware of interest rates and opportunity costs. Our uninformed choices about cars and college have long-lasting consequences and are just the tip of the iceberg; we do not understand numerous financial principles affecting our lives.
The scarcity of financial knowledge is rampant among young people. More than half of teenagers fail a standardized financial literacy quiz. Moreover, 64% of teenagers earn money from work, but only 31% can manage a bank account. Young people like myself regrettably — and we do regret it — know more about TikTok and Minecraft than money.
“ Financially illiterate youth become uninformed adults with economic struggles.”
Financially illiterate youth become uninformed adults with economic struggles. Most millennials owe more than $100,000 on average, and 61% of adults live paycheck-to-paycheck. Nearly half of those earning over $100,000 live paycheck-to-paycheck, too. These statistics paint a dire picture of my generation’s potential future.
Lacking financial knowledge is linked to widespread economic inequality, “the defining challenge of our time,” according to former President Barack Obama. Financial disparities are rife in my rural community. Nearly half of the students are on free or reduced lunch, a proxy for low income and poverty.
My mother is a first-grade teacher in my small town. She recounts the pervasive food and housing insecurity experienced by her students, often wishing she could care for them. Devastatingly, one-third of economic inequality is caused by disparities in financial literacy, as found in a groundbreaking report.
What can curb economic inequality and its partial root cause, financial illiteracy? The answer is certainly not parents; 72% do not discuss money with their children, demonstrating the need for financial education beyond the home.
Grassroots initiatives are one approach to bridge gaps in financial education. For example, I founded Students Teaching Finance, a student-led nonprofit. Our organization educates hundreds of K-8 students about fundamental financial literacy principles. We teach engaging lessons that cover a range of topics, from needs vs. wants for younger students to compound interest and investing for older students, for example.
Though effective, grassroots initiatives are a patchwork solution to a systemic problem. The glaring offender in America’s widespread financial illiteracy is our education system. Stand-alone financial literacy classes are not required for 77% of high school students. Financial education is a straightforward mechanism to alleviate students’ knowledge gap and society’s economic gap.
A minority of U.S. states already (or soon will) require financial literacy classes. But this still leaves 11.9 million students behind. If you live in a state not requiring personal-finance education — 35 of them — I urge you to engage your school officials and lawmakers to require financial education.
Financial literacy can be engaging and relevant for high schoolers. For example, lessons on budgeting summer paychecks are impactful, and we will be glad our dollars stretch further. Financial literacy education has bipartisan support, but it takes advocacy to implement.
Although not a panacea, implementing financial literacy education is monetarily and politically cost-effective. Curriculum changes will systematically teach youth financial literacy, fuel a more robust economy, and counter economic inequality.
Money should no longer be a taboo topic, and society cannot afford to ignore the power of financial literacy to impact equality and the economy. Educators and legislators must guarantee through tangible policy that all students learn financial literacy in high school — and we teenagers will thank you for it.
Isaac Hertenstein is a high-school student in Greencastle, Ind. He founded Students Teaching Finance (www.studentsteachingfinance.org) to increase financial literacy nationwide.