New law requires personal finance class
Managing money has long been absent amid the academic lineup in California public schools, leaving students on their own to figure out their finances. Too often that results in disastrous consequences that can have a long-term — if not lifetime — impact on earnings and quality of life.
That will change starting with the class of 2031, the first California cohort required by new legislation to take a semester of personal finance to graduate. The class is expected to cover a long list of topics, including credit cards, taxes, identity theft, bank accounts, interest rates, college loans and more.
“Saving for the future, making investments, and spending wisely are lifelong skills that young adults need to learn before they start their careers, not after,” said Gov. Gavin Newsom, in a statement prior to signing the legislation last week.
State education leaders will spend the next few years working on curriculum and teacher training, with the course available starting in fall 2027.
Advocates for financial literacy agreed to pull a measure from the November ballot that would have asked voters to approve the new graduation requirement if state leaders failed to pass the law.
“Financial literacy is a critical tool that pays dividends for a lifetime,” said state Senate President Pro Tempore Mike McGuire, D-Geyserville, in the statement. “There’s a wealth of data about the benefits of learning these valuable lessons in high school, from improving credit scores and reducing default rates to increasing the likelihood that our future generations will maintain three months of savings for emergencies and have at least one kind of retirement account.”
California is now the 26th state to require a course on personal finance.
The effort had wide support, with enough signatures to qualify for the ballot and ultimately unanimous support through the legislative process, said Tim Ranzetta, a proponent of the initiative and co-founder of the nonprofit Next Gen Personal Finance, which provides free curriculum and teacher training on financial literacy.
Ranzetta also noted that personal finance education could increase lifetime earnings by $127,000 per student, according to a 2024 study.
Modesto student Kevon Bennica traveled to Sacramento in late June to urge the Legislature to pass the measure.
“For my peers, investing in stocks might as well be as complicated and convoluted as rocket science or calculus, and 401(k)s sounds like a whole lot of money,” he said during a state Senate hearing. “But, seriously, can you blame them? The reality is they’re not being taught this in school.
“Your financial health dictates your housing, your health care, your access to education, the food you eat and so much more,” Bennica continued. “I truly believe this bill is one of the most impactful and feasible ways we can combat wealth inequality.”
There was some debate about how to implement the requirement, given students’ already stretched schedules, with requirements that include one semester each of health, ethnic studies and economics. The legislation signed by Newsom allows students to substitute personal finance for the economics requirement, which the ballot initiative would not have allowed.
State Sen. Monique Limon, D-Santa Barbara, strongly advocated for the bill, saying California needs to catch up to other states in educating students about money.
“A majority of our students enter higher education and the workforce without basic financial literacy and don’t know the difference between a credit card and a debit card,” she said before the unanimous Senate vote. “Those with higher financial literacy are more likely to invest in savings, prepare for retirement and manage their debt.”