Financial literacy: Staple for futures
How do we learn to handle money wisely? Unfortunately, many of us never really have. That’s why the innovative financial literacy requirement in Virginia’s public schools is so important.
Few people haven’t wished at some point that they were better at managing their finances. Maybe it’s the young adults who have charged so much on credit cards that they are falling into a seemingly bottomless pit of debt and late fees. Maybe it’s the couple with kids who think they’re getting by just fine until an unexpected emergency wrecks their budget. Sometimes, it’s the older people who think they’re ready to enjoy retirement — until they try to live on reduced income.
Until recently, the primary source of financial wisdom was parents and other family members, who tried to pass on what they’d learned — sometimes the hard way — to the younger generation. Those who weren’t fortunate enough to grow up learning those important lessons from their elders often struggled before they got their financial situation under control — if, indeed, they ever did.
Back in 2008, Virginia was one of a few forward-thinking states that saw a message in the global financial crisis that resulted from collapsing home prices, defaults on subprime mortgages and risky investments: People needed to be better educated about money and how to manage it.
Beginning with the 2010-2011 academic year, the commonwealth has made one credit in economics and personal finance a requirement for high school graduation. Over the years, more states have followed suit. Starting with the 2020-21 freshman class, North Carolina high school students now must pass a financial literacy class to graduate.
There’s considerable evidence that Virginia’s class is making a difference. Exams show high rates of student success in many schools, including in Newport News and Chesapeake. Virginia was one of seven states that recently earned the highest “A” Grade on a “report card” from the Center for Financial Literacy at Champlain College in Burlington, Vermont.
More to the point, many students say that the course, which includes both theoretical economics and practical advice, is making a difference in their lives.
Some young people say that what they learned helped them make decisions about how to finance their college education so that they would not have crushing student loan debt after graduation. The course includes advice on how to deal with the FAFSA application for federal student loans as well as how to apply for scholarships and other loans. Students also say they learned not to take advantage of too many of the credit-card applications that are likely to flood their mailbox once they finish high school.
Recent studies have found that states that have had personal finance and economics requirements in high schools for several years report marked improvements in the credit scores of young adults.
Virginia’s course covers topics that are likely to come in handy over the years. Students are taught the advantages and disadvantages of owning vs. renting a home. They learn about types of insurance and different retirement plans. They are taught to think sensibly about such things as having a savings fund for those inevitable emergency expenses.
Some students say what they have learned in the course has made it possible for them to help their families get better control of their finances.
At a time when public schools come in for a great deal of criticism and are the subject of many political disputes, it’s encouraging to see that Virginia has been a leader in providing our young people with this essential knowledge and know-how. It’s exciting to see students responding to this opportunity, doing well on tests and applying the knowledge they gain to their own lives.
The lessons high school students learn about economics and personal finances will be a lifeline for them when they graduate and start their adult lives. This required course is one more way in which our public schools are preparing young people for life beyond the classroom.