Financial Literacy Classes Required to Graduate High School
Until fairly recently, financial literacy was not a requirement to graduate high school. Now it’s a requirement for almost one-quarter of all high school students (22.7 percent.) Twenty-six states have legislation in the works to make this compulsory.
The reason there is so much attention on financial literacy education at a young age is that studies show almost half (43 percent) of Americans are not financially literate. This lack of education has a profound effect on the economy, as it impacts financial decisions throughout one’s lifetime.
The best time to instill an understanding of these basic financial concepts is when they are old enough to grasp them, but still young enough to use them from the start of their careers. People who are financially literate make fewer money mistakes and missteps.
What is financial literacy?
According to Investopedia, financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. Financial literacy is the foundation of your relationship with money.
The United States Treasury’s Financial Literacy Education Commission defines it as the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.
The National Financial Literacy Quiz tests you on these key areas: how to earn, save and grow money. A quiz of this type usually includes questions about compound interest as it applies to savings and credit card debt, investment strategies, budgeting, retirement planning, and setting financial goals,
When you have a sound understanding of the basic financial principles, you are less likely to make rash or unsound financial decisions that could create a future money crisis.
Money and stress
The total debt in America is up to 15.84 trillion in 2022. Credit card debt is at 841 billion – also up this year. The average American household has about $6,473 in credit card debt. There is evidence that the growing debt numbers are affected by a lack of financial literacy – too many Americans don’t understand how debt and compound interest work.
Not knowing these basic concepts leads to poor saving habits, overspending, excessive credit card use, and bad investment decisions. Money troubles are high on the list of reasons for stress. Financial insecurity in families can be a contributing factor to divorce and domestic violence.
Teaching these basic financial concepts to high school students sends them out into the world with a better grounding and hopefully allows them to make good money decisions and build a better future.
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