The State Of Financial Literacy In K-12

Aditya Singhal 

If we want to find a silver lining in the dark cloud that is the current global economic crisis, it’s that the need for financial education and importance of financial literacy for young adults has recently garnered more awareness. The increasing difficulty of financial decisions along with a rapidly changing economic climate makes it more important than ever before for young people to understand personal money management.

An increase in teaching

States and school districts are beginning to respond to these changing needs. There are currently 43 states that include personal finance in their K-12 standards.

According to the National Council of State Legislatures, 13 states passed financial literacy legislation during their 2014 sessions. Things look promising at a glance:

  • Utah now calls for the assessment for those school districts where students take a general financial literacy course.
  • New York passed a bill that will use the New York State summer youth employment program to develop a financial literacy program for young adults.
  • Other states that passed legislation included Hawaii, Mississippi, Pennsylvania, and Michigan.

Challenges in finding the right educator

We know that good teachers are essential to providing a good education. As Tom shared in the last Getting Smart Podcast, talent matters. Because there is no single accepted certification to teach financial education, teachers of many different backgrounds discuss financial education in the classroom. This may range from teachers who specialize in math, social studies, or vocational/technical education – these teachers have to teach financial education topics that they themselves may not fully understand.

How well are teachers able to teach personal finance? The answer came in the form of a two-year national study titled, Teachers’ Background and Capacity to Teach Personal Finance. A few of the highlights of the findings include:

  • 20% of teachers felt competent to teach the personal finance topics
  • 11.6% of the K-12 teachers had taken a workshop on how to teach personal finance
  • 37% of K-12 teachers took a college course in personal finance
  • 89% of teachers either strongly agree or agree that K-12 students have to complete a financial literacy course or pass a test to graduate high school
  • 80% of the states have some form of finance education standards or guidelines. When compared to 1998, this is a dramatic increase of 38%.

Teachers do not feel prepared to teach personal finance

One of the more shocking findings from the study is that less than 20 percent of teachers surveyed felt “very competent” to teach the personal finance concepts. This should show that while teachers appreciate the necessity of teaching personal finance in K-12, many of them do not feel as though they have the resources or expertise necessary to do so.

One of the primary predictors for teachers feeling competent to teach personal finance was offering a vocational/technical course option or if the educator has taken a personal finance college course. Teachers also indicated that they felt less competent in the more technical topics of financial responsibility and decision-making, saving and investing, and risk management and insurance.

Though it is great that more states are introducing these standards, the fact is that the survey revealed that most teachers do not feel overly qualified to use those state standards. More than half (63.8 percent of current teachers and 61.5 percent of prospective teachers) of the surveyed teachers do not feel they have the necessary qualifications to teach in accordance with the financial education standards provided by their respective state.

Teachers do not feel comfortable with the financial education pedagogy

Given that most teachers do not feel qualified to teach financial education, this should come as no surprise. Amongst the K-12 teachers in the survey, more than half of them felt that they were “not well qualified” to address learner needs for financial education, employ instructional strategies, or design curricula.

However, teachers did feel that collaborating and teaching with parents and the local financial service community would be a positive strategy to use if they wanted to teach financial education. It is encouraging to see that K-12 teachers are open to a variety of teaching methods.

Teachers ARE open to further education in financial literacy

Another positive that came from the survey was the fact that upwards of 66 percent of the prospective teachers and almost 75 percent of current teachers said that they were feeling positive about participating in taking courses to teach financial literacy. This is a positive step, especially if we consider that most do not feel comfortable in teaching this subject.

Even though we are seeing many steps in the right direction, the fact is that there is currently not enough knowledge and not enough financial support made available to address financial literacy for K-12 students. The only way that this is going to change is by making content engaging and accessible for those who have the qualifications to teach or to have interested teachers learn skills on their own.

Focusing on the future

It is important to introduce new curriculum that focuses on the costs and financial benefits of going to college, debit, credit, planning, and savings. This makes it possible for students to have a better understanding of their financial future.

There are programs available such as Discovery Education Streaming and TD Bank Wow!Zone that supplement  existing curriculum and discusses factors such as investment, taxes, and finance. These programs offer K-12 financial literacy lessons that are in line with state standards.

According to financial literacy educators, the idea behind teaching financial literacy is straightforward – make sure that you teach students early and often. Because the primary concept is about making good choices, financial literacy is something that needs to start early. It empowers the student. Whether it is a state requirement for students or not, the truth is that financial education is everyone’s business.

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Aditya Singhal is the co-founder of Follow Aditya on Twitter, @SinghalAdityas.

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Getting Smart loves its varied and ranging staff of guest contributors. From edleaders, educators and students to business leaders, tech experts and researchers we are committed to finding diverse voices that highlight the cutting edge of learning.

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