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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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I work for Cecil County Public Schools, in my 32nd and final year. We have offered personal finance courses for over 20 years. The course I teach “Topics of Math” looks at personal finance from a math perspective. Our social studies department offers “Introduction to Personal Finance”. We are doing our part to educate young adults to invest early using 401k plans and Roth IRA’s, and to limit the use of credit cards.
This may not demand the same amount of time as the three ‘Rs, but it can have tremendous value. I applaud it. I’d bet most high school kids would have a lot of interest in things dealing with money. I suggest adding a few more elementary things. Assessing risk. How everything in life can viewed through option theory (and preserving your options, too.) Understanding compound interest. The basic concepts related to the time value of money (a dollar tomorrow is worth less than a dollar today) and how to use that to your advantage. How to read the tables in the Wall Street Journal. Some basic financial formulas. And how to balance your checkbook.
Wonderful idea! I sincerely hope it is an effective part of the education of future citizens.
Quis custodiet ipsos custodes?
For those whose Latin is a little rusty — which includes me:
https://en.wikipedia.org/wiki/Quis_custodiet_ipsos_custodes%3F
I encouraged my kids to take the personal finance elective in high school. One thing they had to do was check ads to set up an “apartment”/utilities and transportation, including insurance. Then there were exercises regarding how much they thought they would need to eat on, and other ‘extras’. I think it helps highlight how expensive it is to get by. My kids never thought about the various insurance premiums and taxes as well. I think it was helpful. Saving/investing has been learned mainly from us as parents. I had them open Roth IRAs when they began earning their own income. Frugality and saving seems to be learned by immersion in our family.
Greg – thank you for your enlightening HD post! Over the last couple of years, I’ve had the pleasure of volunteering at a local HS, instructing juniors and seniors in a non-credit “financial readiness” course. Classes are held over just five days during the semester. The course content was largely constructed from my own business experiences working with customers on basic financial concepts (cash flow, paying for college, debt management, investing for retirement, home purchase, taxes, insurance, etc.) mixed in with a healthy dose of kitchen-table common sense around making sound money decisions as an adult. The class was basically a “Cliff Notes” style course primarily designed to improve financial awareness for the students.
The breadth and depth of Next Gen’s online Personal Finance curriculum (evidently all of it pre-built and available free online for interested educators) is truly impressive! I selfishly wish I had known about this organization’s work sooner (like about 2 years ago). They are clearly committed to helping fill a significant void in our education system regarding this very important topic.
Thank you for this comprehensive (and hopeful) article. It is ironic that my high school did not have a personal finance course or that my business-oriented parents and neighborhood assumed that often complex package of skills could simply be absorbed. The rent for my first college apartment was $140. I made the check out for: 100 and 40/100 dollars. I soon got a knock on my door from the manager.
Absolutely more financial education is desirable and necessary. However, that is less than half the loaf.
Individuals must act responsibly, must act based on the knowledge they receive. I think we make too much of the lack of financial education as an excuse for irresponsible behavior.
Virtually anyone can do better in their financial lives if they put a bit of effort into it.
I think financial education should be mandatory, but that is only a start. Prudent financial decisions must be front and center in our lives every day.
Yes indeed. There is a very simple formula I and my kids follow.
K+A=S
The knowledge and action go hand in hand to gain $uccess.
I’m comfortably retired and have always done my best to be financially responsible. However, if I’d known as much about finance 50-60 years ago as I do now I’m sure my current portfolio would be considerably larger.
What an excellent effort on the part of Mr. Ranzetta. I commend both him and Michael Jordan for their concern for the future of others.