Science is cool…but finance is necessary
Let me spin the clock back to 1992. I was a sophomore at North Salem High school in Salem, Oregon and was walking into my chemistry final. I surveyed the room and could see the looks of trepidation on the faces of my fellow students as we got ready for the infamous “Sludge Test”, wherein a dirty brownish-black liquid was handed out in beakers and the purpose of the test was to discover what was in it. I remember passing this test, I believe I even got an “A” on it…but I remember nothing else.
The truth is, I have never needed the information I learned in my chemistry class or that was assessed in my “Sludge” test. The closest I came to using that information was when I attempted, and failed, to answer a question about ionic bonds in a game of trivial pursuit.
I enjoyed my science classes more than the others that I took in high school, but I don’t feel they really prepared me for adult life in the United States — even though they took an out-sized portion of my time in high school.
Looking at the general high school requirements from around the country it seems that not much has changed in the required curriculum since I went to school:
This curriculum ensures that high schoolers graduate with a basic understanding of science, which is nice, but no knowledge of a more fundamental life skill: personal finance. So, students know about coral but not credit, about bioluminescence but not budgeting, and about invertebrates but not interest rates — they’re better prepared to be marine biologists than financially solvent citizens.
My issue isn’t with science specifically but with the mandated curriculum in the U.S. that seems to miss the mark on what is arguably the most important life skill responsible adults need regardless of what career they choose after they graduate.
Ok, so America doesn’t require Financial education…do other countries?
Understanding finance is more than just doing a basic budget (although that’s important too!) it also includes understanding the time value of money, the importance of saving and investing early, pre-payment/full payment of a loan and how that affects the interest rates of financial products.
The table below ranks students by country based on their PISA (Programme for International Student Assessment) test scores:
Unfortunately, at least 1 in 5 American high school students don’t really understand even basic financial concepts today:
“The percentage of students performing at or below Level 1 is larger than 20% in Brazil, Chile, Lithuania, Peru, Poland, the Slovak Republic, Spain and the United States. These students can, at best, recognize the difference between needs and wants, make simple decisions about everyday spending, and recognize the purpose of everyday financial documents, such as an invoice…” — Programme for International Student Assessment (PISA) 2015
The country that scored highest was China which has made financial education standard curriculum in their schools and starts in pre-school and continues all the way through college with increasingly complex topics (source: EDUFIN Summit 2017).
Ensuring that we as a country can remain financially stable requires that all of us develop a clear understanding of how finance works from a budgeting, borrowing, and investing perspective which necessitates curriculum reform.
Can President Trump help?
The US Treasury Departments has addressed the issue of financial education through their “National Strategy for Financial Literacy (2016 Update)” that lays out four goals:
1. Awareness and Access: ensure that individuals and families are aware of the importance of financial literacy and have access to financial education resources. These include not only traditional textbooks but also access to tools that “should help with immediate needs, like making a sound choice on a particular financial product or other money choices in people’s financial lives. This just-in-time education must also be supplemented by financial education that delivers a deeper understanding of how and why financial products and markets work, and empowers people to move ahead, not just avoid pitfalls.”
2. Identify and Integrate: determining the personal finance knowledge and skills that individuals and families need to make informed financial decisions at various life stages and for life events.
3. Education Infrastructure: develop guidelines on content, training, and delivery channels for financial literacy and financial education providers and to promote opportunities for partnerships and information sharing.
4. Best Practices: support research to evaluate and identify effective programs and practices.
So, what you’re saying is…
I believe that compulsory financial education should be made part of the high school curriculum that is taught and tested in every public high school in the United States. This conclusion is not unique or new (although most people have never heard it) and the official National strategy laments the absence of compulsory financial education:
“Despite growing evidence that well-designed and implemented high school personal finance mandates help prepare young people to successfully navigate their financial lives, only 17 states require high school students to take a course in personal finance.”
- National Strategy for Financial Literacy (2016 Update), U.S. Treasury Dept website
The latest update from the 2018 “Survey of the States” document indicates that not much additional progress has been made since 2016:
And even though all but 13 States have committed to implementing standards, only 17 have required courses and only 7 actually test financial understanding.
This clear disconnect between education rhetoric and action makes it necessary for citizens and those in the business community to work together to fill the financial education gap.
This is one of the main reasons we created Status Money. We want to do our part to:
· Create awareness of members financial situation in context by giving them access to a tool that allows them to compare to a reasonable benchmark.
· Help identify financial products that are objectively better for our members.
· Provide a transparent view into finances across the nation both geographically and demographically to help educate people on what is normal vs. abnormal financially.
· Help surface financial best practices that are being employed by people all over the U.S.
So, until we evaporate a year of chem lab, or disembowel the fetal pig dissection, or have Planck’s constant walk the plank (at least until college) and instead have high schoolers spend at least a year learning how to budget, understanding how interest rates work, and enabling them to make smart financial decisions we at Status Money will do our best to fill the gap!
Or we could ditch a year of high school history…I hated that!
