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How Financial Literacy Can Be Taught in Schools

Financial literacy is a hot topic in theory, but in practice it often receives a lukewarm reception.

When asked in surveys whether they think financial education should be taught in schools, an overwhelming majority of Americans say yes. But in its most recent study, the Council for Economic Education found that only 19 states require high schools to offer a course in personal finance, and just 17 require that students actually take such a course.

There are plenty of reasons for the ambivalence. There’s disagreement, for example, about the best way to present financial education: Should it be taught as a stand-alone class or across the curriculum? Teachers are reluctant to tackle it because they’re pressed for time and don’t feel comfortable with the subject. When a course is offered as an elective, students often pass it up in favor of something more appealing; when it’s required, they often don’t take it seriously. Even parents sometimes prefer that students spend precious class time on other pursuits, such as Advanced Placement subjects or music and art.

I’ve often written about what seems to work when it comes to financial education (see How to Raise Your Child’s Financial IQ, 4 Ways to Make Financial Literacy Work and Three Ways to Teach Kids About Money. In my experience, based on observations and conversations over the years with students, teachers, parents and academics, it’s best to start with small, age-appropriate lessons that can be slipped unobtrusively into the curriculum.

Not only is this easier to manage and less intimidating, research shows it’s also effective. In a survey of teenagers in 18 countries by the Programme for International Student Assessment, results showed that students in the U.S. scored appreciably higher if they simply had a bank account.

I conducted my own mini survey with two young friends of mine, twin sisters Laura and Amanda. As high school sophomores last year, the girls completed a required course in personal finance. We discussed what they liked (and didn’t like) about the class, and their experience fit right in with what I’ve observed and what the research shows.

Classes should be practical. In one of the girls’ favorite exercises, they were asked to play the role of a person with a given educational level and income and to plan a budget that included housing, transportation and everyday expenses. This kind of reality game is always a hit with kids -- and a revelation. “It’s a bit of a wake-up call,” says Amanda. “You can’t just spend your money on clothes and iPhones.”

Teachers should be comfortable in the role. Laura and Amanda took their course online, which they preferred because they could move at their own pace without distractions. But they missed having a teacher they could consult. “A creative teacher could have done a lot,” says Laura. School districts can address that by taking advantage of free teacher training programs, such as the JumpStart Teacher Training Alliance, a collaboration that’s administered by the JumpStart Coalition for Personal Financial Literacy.

Classes should be fun and interactive. If the course hadn’t been required, Laura and Amanda think few students would have taken it. “Personal Finance and Economics sounds a little daunting,” says Amanda. Calling the class Your Money might have attracted more interest.

So would a more interactive or game-based program, such as the Council for Economic Education’s Gen i Revolution or the graphics-rich, six-hour financial literacy course from EverFi. When I asked Laura and Amanda to take a look at EverFi’s sample video, their reaction was, “Wow. This looks way more engaging than our course.”

Fortunately, the girls felt comfortable going to their parents with questions, which generated dinner-table discussions about such things as managing credit and investing in stocks. But not every parent feels at ease with those topics. “For the typical kid, this class is probably a good thing,” says the twins’ mom.

Next: What parents can do.

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