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Rapper 21 Savage is starting a financial literacy program in Atlanta. Why isn’t the rest of America doing that?
Approaching my senior year in high school, the one thing I can remember being taught about personal finance was how to write a check. I learned that in fourth grade. To be honest, I’ve forgotten.
Financial literacy for students means having the knowledge to make financially prudent decisions. It means knowing how loans (especially student) work, along with credit/debit cards, day-to-day money management, savings, and investing for the future.
Only 21 states require high schoolers to take a course with some component of personal finance at a time when they approach the most consequential financial decisions of their lives, and although scholarly research has demonstrated the efficacy of at least some of these curricula, California is one of six states with no personal finance in its state standards.
A long-established belief about financial literacy that contributes to this is that it’s for parents to teach, not schools. Yet when I polled a few of my friends, none had even considered talking to their parents about money. (I heard) “Dude, I don’t know, I’ll learn it at some point.” But when? By trial and error? With college loans? A 2017 T. Rowe Price survey meanwhile found 69% of parents had “some reluctance” to discuss money with their children.
In my experience, kids want to learn financial literacy, they’re just not given the opportunity. After leading multiple financial literacy workshops for foster care and other underserved teenagers around the Bay Area over the last three years, I’ve found that they’re eager to learn these topics, though it’s always their first time being introduced to them. The range of money-related things they’ll soon have to handle always shocks them.
Now most students my age are spending the next year figuring out where they’re going to college. Almost all college education comes at a cost — but students don’t have realistic expectations of that. A 2017 study found that 38% of students thought they were going to use student loans, while 60% ended up doing so. If not prepared, these loans will likely leave us with debt we’re relentlessly trying to pay off every year through our 40s.
Financial education is even more relevant in the current situation. The pandemic has led to a record unemployment rate across the U.S. People need savings to ride out unemployment, however, a 2018 Federal Reserve study found that “only about 40% of (all U.S.) families have liquid savings equivalent to at least three months of expenses.”
Of course, limited incomes are a predominant factor, but financial literacy also matters. A Western Michigan study found a correlation between adults’ low income and low financial knowledge. The study found that low-income participants knew the least about savings, averaging 47% on a test. On top of lower incomes, lack of financial literacy knowledge may contribute to lower savings and exacerbate economic inequality.
Meanwhile, my generation is increasingly tech-dependent. The ease of using financial platforms contributes to a sense of disconnect from money’s value — typically, it’s psychologically easier for one to send our money through an app or the stock market vs. pulling $50 out of our wallet — and this disconnect leads to improper budgeting and financial decisions.
Financial literacy allows for better understanding of one’s situation and gives students skills to plan and achieve financial goals. If you’re an adult, you can take the chance to educate students and advocate for change in the standards. If you’re a student, start educating yourselves — see here for some resources to begin!
Parth Asawa is a senior at Monta Vista High School in Cupertino.
Well-written piece – by a high school senior-to-be no less. The author may already be too wise – financially – to work as a reporter at a newspaper. But maybe the demand for real journalists will increase as Americans learn that lying self-serving politicians, monied special interest groups and foreign government operatives threaten the continued existence of representative democracy in America – and even life on planet Earth. Going more directly to the piece, I gather the author wants state legislation requiring some instruction in financial literacy. Meanwhile, students should educate themselves and make any teaching proposals to teachers and other decision-makers in the public and private schools.
Berkeley policy professor and Obama administration advisor David Kirp has long advocated for public funding of children’s college savings accounts (CSAs).
The amounts can be small, but their impact can be big if institutions like schools (or cities) funded them very early on, seeding path to college/advanced career training, and also allowing children and families to practice financial investments as they age.
The goal of publicly funded college saving accounts for socio-economically disadvantaged families is not to locally fund the entire cost of college, but to nudge habits over a lifetime to contribute to one’s own additional investments. The amount given can be very modest, well within the per-pupil spending of schools, and can be funded by private companies/donors too.
More on David Kirp’s work on life-changing community policies towards children:
http://www.edpolicythoughts.com/2011/03/book-review-kids-first.html
More on the research behind CSAs: https://www.urban.org/sites/default/files/alfresco/publication-pdfs/2000157-A-Review-of-Childrens-Savings-Accounts.pdf
Well written, Parth, and very important.
I graduated from high school in 1970, and middle-class kids of my generation usually got a small weekly allowance starting around age 8, but most of our money came from small jobs done for our parents or neighbors. Boys mowed lawns, raked leaves, or had paper routes. Girls mostly baby sat. In the summer, some of the more ambitious kids would be bussed to nearby strawberry fields to pick fruit for a few hours each morning. (I lived in a small city, and the farms were only a few miles away.) By age 16 many kids had after school jobs and many had summer jobs. A local bank offered kids from first grade on the chance to open a savings account that we contributed to by putting a few coins into an envelope each week at school, which somehow got deposited to our account. As you point out, the “virtualization” of money into apps makes it harder to get a “feel” for the amounts we earn and spend. I was taught that there were really only two things one should take out a loan for: paying for college and buying a home. I haven’t adhered to that advice completely, but I think it’s still a wise approach.
Personal finance, the nuts and bolts of budgeting, paying bills (not day trading and startups) should be required of all High School graduates. BTW In and out is paying near $20 an hour, big banner posted. I guess these kids are too well funded by mom and dad to bother working.