The demand for financial literacy education among high school students has increased in recent years. With ease of access to bank accounts and credit cards and fear of abuse, mishandling, or scamming, financial literacy has become a need for teenagers turning into adults.
Only eight states have state-wide requirements for passing a personal finance course. Five more states are implementing the requirement, with Florida being the largest state to do so. Previously, Florida offered a personal finance course as an elective, but only five percent of students took advantage of the opportunity.
Educators and financial experts agree that high school students are old enough and wise enough to understand financial literacy information.
Why Do We Care?
Research shows that low financial literacy leads to difficult financial situations throughout life. As indicated here, low financial literacy tends to lead to inadequate savings, difficulty paying bills on time, and, perhaps most importantly, many more hours in a week worrying about personal financial situations.
Taking a required personal financial literacy course does not prevent such outcomes, but it can lead to better understanding of money-related decisions and how those decisions lead to better financial health in the future.
Here is what schools or programs should teach teenage students.
Financial Literacy Topics
Financial literacy courses offer the basics of managing money. They provide background knowledge for creating a solid financial foundation, and prevent young people from making mistakes which create financial struggles early on. Such struggles can linger, preventing young people from reaching the financial stability they need for adult living.
Here are the topics most often offered in financial literacy courses:
- Budgeting: Basic budgeting is keeping track of your income and your expenditures. The goal is to make those two numbers equal each other, or to have more income than expenditures.
- Debt: It is very easy to go into debt these days. Credit cards invite debt, as do car loans. It is important for young people to be aware of how much debt they have, how much their debt is increasing due to interest rates, and how they can reduce their debt
- Saving: There are two ways to approach saving. Put away the difference between what you make and what you spend each month, or determine how much you want to save each month and manage your income and expenditures accordingly. The value of having a savings account comes when you try to acquire credit; your credit score and your credit rating are both determined by the amount of money you are able to keep.
- Investing: From a basic standpoint, investing is placing your extra funds into a financial tool that will produce additional funds in the form of interest. Savings bonds, interest-bearing savings accounts, and individual retirement accounts or 401(k) accounts are the simplest form of investing.
Ways to Become Financially Literate On Your Own
Many people believe our schools should be teaching basic or secondary financial literacy to middle school and high school students. If you were not so lucky, or you want to educate your child on financial topics at home, here are some ways to do that:
- YouTube Videos: Say what you will about social media, but instructional YouTube videos can teach us how to do it ourselves in almost every imaginable category, including understanding financial literacy. If you are serious about using YouTube for this purpose, find out what you can about the instructors who post instructional videos. A simple internet search will reveal the bonafides of the instructor. Pay attention, too, to the nature of the instruction. Is it a general overview, or a step-by-step lesson similar to what you might get in school? Take notes, just as you would in school. Forbes suggests Graham Stephan, Ryan Scribner and Nate O’Brien as some of the best YouTube instructors. Personal finance guru Dave Ramsey has a large following for his YouTube channel as well.
- Books: The “…For Dummies” series is a great place to start. As you become more literate, the sophistication of the books you read will increase. You can show your knowledge early by picking up copies of these books in used books stores.
- Online resources: There are websites dedicated to personal financial issues and concerns more than financial literacy, but they can help protect you from making financial errors. Sites like Nerdwallet and ThePennyHoarder are likely to have articles specifically targeted to answer your personal financial questions.
- Community colleges: Community colleges often serve to provide education that somehow missed students in high school, and financial literacy is the perfect example. You don’t need to be pursuing a degree to attend community college classes. To find such a school near you, look here.
A Final Thought
If you are a parent concerned over the financial literacy of your adulting children, offer whatever advice you have. Of course, it is very possible you made personal financial mistakes along the way. They are valuable: don’t be afraid to admit them to your children so they don’t make the same mistakes.
The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.