Importance of Financial Education in High School

"Over 50% of Americans have credit cards and the latest stats show that credit card debt stands at $7,050 per average household, with an average of 17%," (Jez Davidson, 2016). Many people in this nation lack proper financial education. As a result, this negatively impacts unemployment rates, poverty, and GDP. Financial education is an essential skill that must be taught, as it can't be learned otherwise. It is used in everyday life and is a necessary skill for financial independence. Therefore, a financial education class should be required in every high school.

It would enable students to become more self-sufficient.

Financial education is utilized for making crucial decisions with financial income and understanding the consequences of making poor choices with disposable income. Disposable income is the amount of income you have after tax that can be used for saving or spending (Chapel Hill, 2017). Financial education classes were first introduced to assist the declining GDP in the USA. The GDP, or gross domestic product, is the value of all items sold or bought in the United States of America. These classes were also used to help lower the unemployment rate and reduce the poverty percentage, as people were making poor decisions which led to bankruptcy or impoverishment. Financial education classes instruct individuals on how to pay taxes, pay off mortgages, allocate a savings percentage, and balance the amount of disposable income with savings and consumption (Field, Bill 2017).

The text is provided in college, online, and in high school as an optional elective. However, many people don't take the class, which results in only one or two actual class sizes per high school. The first financial education program ever created was the Organization for Economic Co-operation and Development, or the OECD. This organization was founded in 2003 and launched its first program in 2008. The program allowed research and economic data on financial education to be displayed to the public online (Omar Baig, 2018). This program was designed as a reference to help students understand that financial education is an important skill that should be learned. According to the National Center for Education Statistics, in 2015, 69% of high school seniors enrolled in college the following year (Genevieve Lord, 2018). This suggests that many people are aiming for higher-income jobs, which necessitate the use of financial skills. This makes it imperative for individuals to learn about it so that they can manage their finances properly.

Many people believe that taking a financial literacy elective would be useless in the long run, but they are completely uninformed about the effect of a financial education class in high school on the American economy. If financial education were a requirement in the American education system, it would benefit the American economy immensely. Paul Carbert, a policy advisor at the North East Chamber of Commerce, provides an insightful perspective on how teaching financial education can lead to more job opportunities. “Children can get to understand marketing, numeracy, literacy, and how to budget properly. Not everyone will be magical wizards with cash but most people on the program have picked up some tips that they can learn from. This can lead to a variety of careers in the financial services industry," (Jez Davison, 2016). This education could help lower the unemployment rate, as a new variety of job opportunities could be made accessible to the public.

Jobs, such as accounting, financial education, and financial analysis, would also help to boost the GDP as more money would be able to circulate through the economy. Financial education contributes to economic growth by increasing the level of consumption in the economy (McConnell, Campbell R., et al., 2016). Participation in a financial education class would foster better saving and spending habits. Greater overall wisdom in spending money on superior goods and services would increase the money entering the economy, thereby increasing demand. This would generate a higher demand for supply, leading to an increase in the value of purchased items. Ultimately, this would raise the GDP and benefit the American economy. Additionally, financial education classes could provide American high school students with the acumen necessary to make informed purchases online or internationally, further benefitting the American economy.

As a high school student grows and graduates, the number of financial decisions an individual must make continues to grow. If a student falls behind on their student loans, they will add more debt to the national debt that America has built up. However, if a student understands how to handle the problem of student loans and debt, they will be able to help bring the national debt down by keeping up to date on their own debts (Lord Genevieve, 2017). This would immensely help the United States of America by reducing the anxiety of the students and also allowing the national debt to be alleviated. All of this information from a financial education class shows how it can benefit the American economy in the long run.

Some people argue that taking a financial education class in high school would be a waste of an elective; however, this thought process is incorrect. A recent survey, conducted with around 2,500 college students, found that 91% of respondents would feel more confident about their finances if they were taught about financial planning at school (Harrington, Cindy, 2018). This small survey is just the start for demonstrating how financial education is valuable and beneficial if that many people would feel more confident having taken a class. One financial expert who disagrees with this claim is Annamaria Lusardi, an author and professor at George Washington University. She specializes in financial education and says, “We have a $1.3 trillion student loan debt and a huge population that doesn’t even know how interest is compounded” (Carlson, Karen, 2017).

Since the debt is $1.3 trillion, this means that many people will have to pay off these loans later in life. However, many of these people haven't taken a financial education class, so they may not be properly informed on how to pay for a student loan later in life. Also, many people may believe that they are already financially educated. However, a financial literacy quiz given to 27,564 adults from every state revealed some very interesting results: only 17.4% of people received scores that reflected excellent financial literacy (Carlson, Karen 2017). These results show that many people who may be against the idea of a financial education elective course may simply be uninformed about their own financial literacy. Many people believe that they understand financial education well enough to live on their own. However, they spend 17 years or more on education but rarely ever have a class that teaches them how to deal with finances.

Another expert in money management, Rocky Lalvani of Richer Soul, makes a good point on why people who think they know money management really don’t know all that much. “Those who make $32,000 or more annually fall into the top 30% of income earners worldwide, while earning six figures places you in the top 10%. How is it we have so much and yet everyone is broke or struggling?" (Field Bill 2017). This point makes sense because it shows how many people are misleading themselves into thinking they “know” how to deal with their finances. Overall, this evidence shows how many people, who are against the idea of an extra elective of financial education, really don’t know all that much about financial education themselves.

There are people who believe that financial education classes are a waste of time because they might not be needed in everyday life. However, there is a positive correlation between taking a financial education class and having good credit scores, managing debts, and generally leading people down a better path in life. "Researchers focused on three states where material personal finance high school education mandates were recently enacted" (Brown, Collins, Schmeiser, and Urban, 2014). Default rates and credit scores of recently graduated students who received this education were compared to similarly aged individuals in bordering states that did not change their financial literacy education requirements in high school. The study found that mandated personal finance education in high school improved the credit scores and reduced the default rates of young adults.

"There was no measurable change in the bordering states over the same time period measured" (Lord Genevieve 2017). This study demonstrates a positive correlation between good credit scores and taking a financial education class. It also indicates that people with debts are more likely to be able to repay them if they take a financial education class. This fact strengthens the argument that financial education classes can benefit people in everyday life. On average, college-related debt amounts to $32,000 per family. This sum includes all student loans, credit card debt, and family loans (Loans Canada 2015). An article from Loans Canada underscores the necessity for college students to acquire financial skills to manage significant debt and loans.

A huge benefit of a financial education class would be gaining knowledge of how to properly handle debt. Another example of how financial education can assist in real-world situations is when dealing with saving and spending appropriately. According to a T. Rowe Price Survey in 2017, a group of 1000 parents were surveyed on whether they discuss money matters with their children. An astonishing 69% were reluctant to talk to their children about money, while 21% said they hadn’t addressed it at all (T. Rowe Price, 2017). These pieces of evidence all highlight how financial education can continually benefit individuals in the real world. Some examples include teaching students how to manage debt, credit cards, family loans, savings accounts, and consumption of products and services.

Works Cited Page

Baig, Omar. “United States – OECD.” Estadísticas - OECD, www.oecd.org/unitedstates/.
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Carlson, Karen. “Financial Literacy Education Statistics from FINRA's NFCS.” InCharge Debt Solutions, InCharge Debt Solutions, www.incharge.org/financial-literacy/data/financial-literacy-statistics-finras-nfcs/.
Chapel Hill. "N.C. Poverty Statistics," www.law.unc.edu/centers/poverty/projects/curriculum/financial/.
Harrington, Cindy. “Should Financial Planning Be Taught at School?” Careers Portal, 17 May 2018, www.careersportal.co.za/finance/should-financial-planning-be-taught-at-school.
Field, Bill. “Money Management in High School a Requirement.” NFEC, 27 Feb. 2017, www.financialeducatorscouncil.org/money-management-high-school/.
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Davison, Jez. “Money Management Is Key to Business Success: A North East Building Society Is Pioneering a Scheme to Teach Youngsters How to Look after Their Cash. JEZ DAVISON Reports.” ProQuest, 10 Jan. 2016.
Lord, Genevieve. “The Case for High School Financial Literacy.” The Case for High School Financial Literacy | High School Financial Literacy Report: Making the Grade 2017 | Center for Financial Literacy, www.champlain.edu/centers-of-experience/center-for-financial-literacy/report-national-high-school-financial-literacy/the-case-for-high-school-financial-literacy.
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“Why Personal Finance Should Be Taught in High School.” Loans Canada, 13 Nov. 2015, loanscanada.ca/money/why-personal-finance-should-be-taught-in-high-school/.

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