The Secretary of Education Miguel Cardona says personal finance lessons should be mandatory in our schools, and we certainly agree. Since our FLEX schools opened, we have been teaching financial literacy to its high school students for the past seven years. Currently only 21 states mandate financial classes in high schools and only a few more require them available as elective courses.
During Financial Literacy Month, it’s important to note that graduates of high schools with financial education are less likely to fall prey to high-cost predatory loans (such as payday loans) than their peers without guaranteed financial education. They are 21 percent less likely to carry a balance on a credit card while in college and apply for Federal aid and subsidized student loans more often.
Students learn to prioritize spending based on needs vs. wants, how to read a paystub with withholdings and deductions, and they discover the beauty of compound interest when you are saving money, but the dark side of that when you are borrowing.
Financial education is essential for students of all socioeconomic levels. Of the 63 million adults who don’t have a bank account, most are from low-income households, less educated or are in a racial or ethnic minority group. These “unbanked” individuals pay fees to cash their paychecks, purchase money orders or use a prepaid credit card.
We see a trickle-up of financial knowledge when our students learn how to be fiscally responsible. They pass on the knowledge to their parents and siblings which helps the entire family save money.
Student Roxeanna is on a path to financial literacy by building credit and getting a good job. She has learned how to budget, create a financial plan and save money. “I now realize why it’s important to know about finances for your adult life,” she said. “I learned that budgeting needs to become a habit now so when I’m older I’ll be in a great financial state.”