(State of Financial Education: Many money problems that Americans face could have been avoided if financial literacy had been taught earlier in school. This knowledge helps create a foundation for students to develop quickly. strong financial habits; and avoiding many mistakes that lead to lifelong financial struggles. This story is one in a series examining the current landscape of financial education in this country.)
Kinsha Sidibe is a first year in high school and she is already learning personal finance.
Just because the state she lives in, Pennsylvania, doesn’t require education. It’s through a program run by a nonprofit, Niche Clinic, through its high school, Mastery Charter School’s Hardy Williams High in Philadelphia.
“Before that, I really had no understanding of personal wealth,” said Sidibe, who is 14.
“It made me realize what I needed to do to increase my net worth and manage my own finances if I didn’t want to go into debt,” she said.
Research shows that a personal finance education helps students avoid payday loans, achieve better credit scores, and reduce private student loan balances and credit card debt, among others.
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Yet access to this education remains uneven and the impact is clear. In 2019, the median wealth of black households in the United States was $ 24,100, compared to $ 189,100 for white households.
When it comes to programs, less than 12% of students are required to take a stand-alone personal finance course to graduate from high school, outside of the six states that require it, research by Next Generation Personal Finance, a nonprofit focused on financial education for middle and high school students, found.
For black and brown students, it drops to 7.4%. Among low-income students, 7.8% are required to take the course.
This means not only that the wealth gap between 1% and 99% will increase, but the racial wealth gap will also widen, warns Yanely Espinal, director of educational outreach at Next Gen.
“Funding decisions and behaviors are not going to improve, which will create another generation riddled with debt,” she said.
To be sure, taking a personal finance course will help equalize understanding for all students.
Of course, financial literacy is not the only factor contributing to racial wealth gap, but it’s part of the solution, she noted.
Already black adults are behind whites when it comes to financial literacy, the TIAA-GFLEC Institute Personal Finance Index 2021 find.
American adults answered only 50% of the TIAA Index correctly, on average. White adults got 55% correct answers, while blacks answered 37% correctly. Hispanics are also lagging behind, with a score of 41%.
Due to the lack of state-mandated personal finance courses across the country, some schools have stepped in to fill the void.
In public schools in Prince George, Maryland, it was actually students who advocated and called for a personal finance class in district high schools last year.
It is one of the largest and most diverse school districts in the country, with 55% of its students black and another 36% Hispanic or Latin American.
The course is now required to complete high school, starting class of 2024.
“We want them to come away with knowledge of how to make money, how to make the money work for them, and how to avoid getting into debt or dealing with the debts they could contract, ”said Monica Goldson, CEO of Prince George Public Schools.
Among the students who argued for the warrant and testified before the board was Zoë McCall.
Second-year high school student Zoë McCall advocated for a mandatory personal finance course for all high schools in Prince George County, Maryland.
Photo: Drue Thornton
While she was having conversations about money at home, she wanted to know more. She also saw the challenge faced by many of her peers, who did not discuss money with their parents at all.
“We don’t all know how credit works. We don’t all know how to get a loan and stuff like that,” said McCall, now a 15-year-old sophomore at the Largo Academy of Health Sciences. , in Maryland.
“We’re going to need to know how to take out a loan to pay for college, we’re going to need to know how to pay off student debt, we’re going to need to know the basics of money, and not many of us do.” font, ”added McCall.
While it’s important for everyone to be financially literate, it’s even more critical for those who are economically disadvantaged and likely know less about these matters, Goldson said.
“We hope that this financial education will allow students to make their money work for them and ultimately be a catalyst towards upward mobility,” she said.
Due to the lack of finance classes in schools, nonprofits have long played a role in trying to bring education to underserved communities.
Class of 2019 at Parkdale High School in Riverdale, Maryland. From 2023, seniors will graduate after completing a compulsory personal finance course.
Prince George County Public Schools
At the National Urban League, financial education is part of the Project ready initiative, which supports young people outside the classroom.
“Some of these kids are in dire economic straits,” said Cy Richardson, senior vice president of programs at the National Urban League.
Some of the obstacles to imposing such education in public schools are inequity in funding of schools, as well as budgetary and governance challenges, he said. Teachers must also have the appropriate skills and training.
“It can’t just prepare people to distinguish between credit cards and the things consumers are facing,” said Richardson. “It’s everyday life; small decision-making wins when it comes to financial capacity.”
While some may also be concerned about the program’s costs, it’s free on a number of nonprofit websites, Next Gen’s Espinal said.
What remains is to find a teacher who is passionate about the material and train them, which can also be done for free through institutions like Next Gen, she noted. Over 6,000 teachers have completed 130,000 hours of professional development with Next Gen since early March 2020.
“Research shows that the impact of this work has led to a significant increase in their confidence, which we know translates to more effective teaching,” said Next Gen co-founder Tim Ranzetta.
Once students start learning the material, it benefits not only them but their families as well.
“The students absolutely take this home,” Espinal said. “You see parents asking about Roth IRA accounts and if they should open them.
“It has a ripple effect on the whole community, students, teachers and parents.”
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