The Implications of a Lack of Financial Education in our Primary and Secondary Schools
Written by Alexis Datta
In an article outlining the relevance of financial literacy in today’s political and economic spheres, Jeff Atwater, the Chief Financial Officer of Florida’s Department of Financial Services wrote that “leaders across our nation should endeavour to prepare our future generations with the skills they need to be successful not only professionally, but in their personal lives as well.”
At the time of his writing, Atwater noted that only 13 states required high schoolers to take a personal finance course as a part of their curriculums. While this represents a drastic improvement from only one state in 1988, today, only 17 out of 50 states have a financial literacy course requirement in their curriculums.
The lack of emphasis placed upon personal finance in primary education is reflected in the aptitude of working persons and retirees. Annamaria Lusardi and Olivia Mitchell, two professors recognised in their contributions towards financial well-being with the Fidelity Pyramid Prize, conducted studies designed to evaluate financial ability. In her summary, Lusardi noted that “even though most individuals deal frequently with credit cards and other forms of borrowing, only a minority of individuals in the United States possess basic financial knowledge relating to debt.”
The implications are vast; Lusardi isolates a lack of retirement planning and detrimental financial decision-making as two key results of this deficit. Evaluators looking to quantify these findings tested credit scores in three states before and after a financial education mandate, finding improvement in each state by at least eight points (shown above).
In its International Student Assessment, the Organisation for Economic Cooperation and Development (OECD) found that there are quite a few countries that fall below the United States in terms of financial literacy. Nevertheless, the U.S. ranked below the OECD average. At the top of the list sits China (Shanghai specifically), followed by seven other countries and the OECD average (shown below).
The overall consensus is clear: the United States needs to improve its financial literacy requirements and offerings for students in primary and secondary schools. These changes will most likely come from grassroots organisations such as Junior Achievement, which looks to change curriculums around the nation to include proper financial literacy training. Without this, the United States might anticipate future financial problems underpinned by a lack of basic financial knowledge.