The Impact of Financial Literacy Mandates in Schools
The age-old question, “Why don’t they teach finances in schools?” is being answered nationwide, with 35 states now requiring students to take a personal finance course to graduate (Council for Economic Education, 2024). As someone who grew up avoiding conversations about finances both at home and at school until adulthood, it’s exciting to see this important topic transforming from a mystery into an essential teaching strategy.
Some may still wonder whether the rise of financial literacy mandates across the US actually positively impacts today’s youth. But the evidence shows it does. A 2018 report by the National Endowment for Financial Education (NEFE) found that states with stronger financial education requirements saw notable improvements in financial literacy and decision-making among young adults. The report even highlighted improvements in smart borrowing, budgeting, and overall confidence in managing finances.
Benefits of Financial Literacy Education
One of the most immediate arguments for requiring financial literacy education to today’s youth is the desire to foster financial capability in future generations. Not only will skills like these help students build individual success via learning how to prioritize expenses, set financial goals, and avoid pitfalls like getting buried in too much debt early-on in their journey, but their impact extends beyond individual success.
Based on research done in the Journal of Financial Counseling and Planning, reduced poverty rates and increased economic stability are both long-term outcomes associated with strong financial literacy throughout a community. Communities with high financial literacy rates tend to experience lower levels of consumer debt, reduced reliance on predatory lending practices, and higher rates of investment in local economies. As a result, financially literate individuals contribute positively to the national and local economies by not only investing in them but also by helping to stabilize economies through reducing poverty over time.
Though there are loads of studies supporting this very idea, most of them essentially come to the same conclusion: in states where mandates exist, there exists significant improvements in budgeting skills, debt management (consisting of lower debt as a whole), and an increased understanding of credit and awareness of long-term financial planning.
Programs across states, such as Utah and Virginia (to name just a couple), provide real-world examples of the benefits of financial literacy education. In Utah, which mandates financial literacy as part of the high school curriculum, students have shown improved credit scores and a greater understanding of debt management. In Virginia, long-term financial education programs are linked to better financial outcomes for young adults, such as lower student loan debt and higher savings rates. These case studies highlight the value of structured financial education in creating long-lasting positive effects on students’ financial well-being.
Banzai’s Role in Financial Literacy Education
Banzai plays an active role in supporting teachers who are bringing financial literacy into their classrooms. By offering professional development certification webinars and tons of free tools including a free education platform stocked with life literacy courses, articles, quizzes, worksheets, etc., Banzai equips educators with the resources and confidence to teach financial concepts effectively. These PD-certified webinars ensure that educators are not only meeting state financial education requirements but also providing students with a thorough and relevant life-long education experience.
Sources:
Council for Economic Education (2024). 2024 Survey of the States. https://www.councilforeconed.org/wp-content/uploads/survey-of-states-2024.pdf
The Effects of State Mandated Financial Education on College Financing Behaviors. National Endowment for Financial Education (NEFE), June 25, 2018. URL.
Reports from States: Utah and Virginia:
Virginia Department of Education. Financial Literacy: Standards of Learning and Resources. Virginia Department of Education, 2021, www.doe.virginia.gov/instruction/career_technical/economics_personal_finance/index.shtml.
Utah State Board of Education. Utah Core State Standards for Personal Financial Literacy. Utah State Board of Education, 2021, www.schools.utah.gov/curr/finance.