Class Worth Taking

Greg Spears

LESS THAN HALF of Americans—46%—have tried to calculate how much they need to save to live comfortably in retirement, according to a 2022 survey by the Employee Benefit Research Institute. I often meet extremely bright people—doctors, residents, PhD students and professors—who say with a sheepish smile that they don’t understand the intricacies of their retirement plans.

For some, this lack of understanding is a choice. People who sense they haven’t saved enough, or any money at all, may not want to know where they stand financially. But arguably these and most other Americans have also been shortchanged. Personal finance is not a standard offering in the general education curriculum in the U.S. Last year, when I asked the students in my college economics class how many had previously taken a personal finance course, only one student out of 21 raised a hand.

This vacuum is worrying because so much rides on successfully budgeting, saving, investing and other financial decisions. Next Gen Personal Finance is a nonprofit group trying to fill that void. Its goal is to make sure every student who graduates high school has completed at least one personal finance class.

Thanks partly to the group’s lobbying, six states added a personal finance requirement for high school graduation in 2022. That brings to 18 the number of states that mandate personal finance study. Only 24% of U.S. public high school students currently receive finance education. That’s projected to rise to 40% thanks to the six additional states that just mandated a state-wide personal finance curriculum—Florida, Georgia, Kansas, Michigan, New Hampshire and South Carolina.

In the 32 states and the District of Columbia that lack a mandate, an average of just one student in 10 will take a personal finance class before graduating. In some cases, the local school district mandates a personal finance course. Most of the time, however, a money class is offered as an elective, folded into another subject like math—or it’s simply not offered at all.

To help build a personal finance curriculum, Next Gen provides school districts with free course materials and teacher training. Some 77,000 educators have been trained to teach a money curriculum, and around 20,000 more join annually, according to Tim Ranzetta, an entrepreneur from Palo Alto, California, who is Next Gen’s co-founder and chief financial backer.

Next Gen’s financial education curriculum is comprehensive. How to use credit cards. How to invest. Budgeting, taxes and insurance. And, perhaps most pertinent to high schoolers, how to afford college without sinking into a pit of debt.

“It’s about behavior change,” Ranzetta said in a telephone interview from California. After taking the class, he said, students “open up savings accounts. Set up Roth IRAs. Make better decisions on student loans.” Their knowledge can also be passed on to parents in a ripple effect. “Kids are taking this home to their families. Parents are signing up for IRAs after their son comes home” from class, Ranzetta added.

The absence of financial education is particularly acute among lower-income students. In school districts where 75% of students or more qualify for free or reduced-cost lunch, less than 5% of children are required to take a personal finance class to graduate, according to Next Gen’s research. These districts often lack the resources to add a new subject, Ranzetta said.

To assist these students, Next Gen is making three-year grants to 15 such districts to allow them to hire a personal finance expert to “be the evangelist” for adding financial education classes. Basketball great and businessman Michael Jordan and his Nike brand have endowed six of these grants, placing financial education advocates in school districts, including in New York City, Detroit and Jordan’s home state of North Carolina.

Ranzetta said he became interested in this work when he was asked to speak at a school about personal finance. He said he discovered students had a natural affinity for the topic because they sense how important it could be to their future. “One hundred percent of kids,” he said, “are going to have to learn to manage their own money.”

Greg Spears is HumbleDollar’s deputy editor. Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger’s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph’s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles.

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