Introduce financial literacy education early — this was the message reiterated by educators, financial experts, and social experts at a recent hearing of the Subcommittee on Children and Families.
Led by the chairwoman, Sen. Kay Hagan (D-N.C.), the hearing focused on the importance of implementing financial literacy in elementary schools and the challenges teachers face getting their students ready to make proper financial decisions.
“For our high school graduates, many of them are entering college or the workforce almost completely unarmed with the basic knowledge, the basic skills they need to manage their personal finances effectively,” Hagan said.
Notably, Hagan also announced that she reintroduced the Financial Literacy for All Students Act, which she said will authorize grants and incentivize states to integrate financial literacy education into elementary and secondary schools and provide professional development to teachers. Her two previous efforts, in 2009 and 2011, both died in committee.
In her home state of North Carolina, Hagan led the effort to require the state to offer financial literacy in schools.
Statistics from a survey conducted by Discover on 1,200 high schoolers between February and March showed that although 83 percent were interested in learning more about managing their personal finances, only 33 percent felt confident that they were capable of doing so.
Sen. Michael Enzi (R-Wyo.), the ranking GOP member on the committee, stated that today’s students need to be taught sound financial decision-making.
Enzi added, “The economic environment they are growing up in will require this knowledge, especially for retirement. We have to let the states continue their great work on improving financial literacy.”
Roughly 14 states have enacted laws or have resolutions in their state legislatures that require some form of financial-management education in schools, according to the National Conference of State Legislatures.
But Sen. Al Franken (D-Minn.) expressed interest in knowing effective ways to combine financial literacy with other courses already offered in schools.
“There are certain life skills that need to be taught and part of our question here is how to work this into the curriculum,” Franken asked. “What configurations of curricula do you see [and] how do you see this fitting into a curriculum [for] K through 12?”
High school social studies teacher Nicole Lipp from North Carolina said, “The ideal way would be to start implementing it in kindergarten and [subsequent grades], because it aligns perfectly with the new common core standards that are coming about because it’s all application.” But for the students who are readying for college without this education, she suggested “a high school life skills class would be ideal as well.”
Sen. Patty Murray (D-Wash) asked about the most effective kinds of training for teachers and whether there were any studies being conducted on its effectiveness.
Panelist Annamaria Lusardi, PhD, of George Washington University commented that although some research has been conducted, it is currently not sufficient to draw conclusions or make recommendations. She added that more rigorous research is needed to assess whether the current teaching methods are working on kids in the states that do offer financial literacy education, as opposed to kids in states that do not offer financial literacy education.
Speaking on the challenges for teachers, Lipp also added that some teachers feel scared since they have to teach high schoolers new concepts in a short timeframe in order to comply with the new common core standards.
But Hagan added that parents should also play a role in teaching their kids basic financial skills, and wondered how this affected the racial wealth gap.
Cy Richardson of the National Urban League explained that the disparity is apparent particularly among households headed by minority females, who are not historically known to be financial stalwarts and therefore may not be any better financially educated than their children.
“The school-based solution is very real, needed and we endorse that, but I think out-of-school, supplemental opportunities are very important as well.”