Financial Literacy Scarce in US Curriculum, Teachers Unqualified

(Photo: Ken Teegardin, Creative Commons)

(Photo: Ken Teegardin, Creative Commons)

A global survey has found that the US scores 14th in the world for financial literacy, with the Scandanavian countries, Canada, and the Czech Republic, among others, ranked above the United States — and the problem may be due to the US curriculum, reports a new study.

Jenny Che, reporting for The Huffington Post, explains that a majority of K-12 teachers do not include financial education in their curriculum. The study, published by PricewaterhouseCoopers (PwC), showed that only 12% of instructors teach courses in personal finance. But 92% believed the subject should be included in students' course work.

One of the reasons could be that there are not enough teachers who have a strong background in this subject area. Of the respondents in the study, only 31% said they were "completely comfortable" teaching finance, and others said the funding was not available for them to have materials in their classrooms that support the subject.

Another difficulty involved in getting financial education into the curricula of US schools is that numerous educators, or 62% of teachers included in the study, thought the course was not a critical skill for students' preparation for college or career.

But student debt in the US has grown to over $1 trillion, and greater than one-fourth of the 42 million Americans who borrowed money to attain their higher education are behind on their payments or are in default.

Educators need to realize that all of a person's major life issues, such as buying a house and getting insurance for a car, rely on having a knowledge of how finances work.

Without sufficient financial education, young people are more likely to continue having financial problems. In 2014, the Organization for Economic Cooperation and Development produced a study that found that American 15-year-olds knew less about money than 15-year-olds in eight other countries.

Some nations have fully developed programs in place to teach kids about finance and, fortunately, signs point to the US doing the same. The change may come through millennial teachers, 62% of whom think financial education should begin in elementary school. 47% believe it should start in the classroom and be cultivated in the home.

In the UK, Suzanne McGee of The Guardian says that Americans are not comfortable with managing their finances. But, although the wealth gap in the country will not be fixed quickly, knowing something about stocks, bonds, mortgages, and the calculus of repaying a loan would help bring average Americans closer to their affluent fellow-citizens. She adds:

"If, by the time students finish middle school, they do not fear balancing a checking account, that's great. If, by the time they're in their mid-teens, they can grasp the magic of compounding – that savings accumulate because every penny an investment earns can create a profit of its own – then they might do what's better, and set aside a retirement account that is sheltered from taxes."

And by the time they graduate from high school they may be able to avoid mistakes that could cost them greatly.

Jeff Senne, a corporate responsibility implementation leader at PwC, said the firm deals with public schools at which students are part of the poorest families in the area, with their parents potentially being unemployed or having to work more than one job. These parents are too busy trying to make a paycheck stretch to feed a family and pay the rent to spend time teaching their children how to budget.

In October, when Champlain College was grading states on the quality of their financial education, only five states received an "A." Twelve states failed, including Hawaii and Alaska.

The Financial Industry Regulatory Authority's Investor Education Foundation found that in Idaho and Georgia, where the financial education programs were considered to be rigorous, there were significant positive differences in 18- to 22-year-old young people's credit ratings.

The PwC offers teaching materials at no cost to schools upon request, but parents need to take action and lobby their school boards for more funding for financial literacy programs.

PwC also published a list of tips for parents who want to give their children more information about handling their money. The tips include setting a goal and saving toward it; advising kids about the concept of borrowing money and paying interest; taking children shopping and explaining how to buy wisely; and the child planning and saving for college.

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