Why financial literacy should be required to take for school

This paper explores Why financial literacy should be required to take for school.

Access to quality financial education is one of the most important predictors of future economic success. Financial literacy is critical for individuals to make informed decisions about saving, spending and investing their money. Despite its importance, there is a lack of personal finance education in our schools. According to a study by the National Endowment for Financial Education, less than 20 percent of U.S. high schools offer a stand-alone course in personal finance (NEFE, 2012).

There are several reasons why financial literacy should be taught in schools. First, it is an essential life skill. Just as we teach students how to read and write, we should also teach them how to manage their money. Second, financial literacy can help reduce income inequality. Studies have shown that individuals with high levels of financial literacy are more likely to be employed and earn higher incomes than those with low levels of financial literacy (Lusardi & Mitchell, 2007).

Third, financial literacy can help prevent financial crises. The global financial crisis of 2008 was caused in part by a lack of understanding of complex financial products by both consumers and investors. If people had a better understanding of personal finance, they would have been less likely to take on excessive debt and make poor investment decisions.

Fourth, teaching financial literacy in schools can help build an economically literate workforce. A study by the Business Roundtable found that nearly two-thirds of business leaders believe that lack of financial literacy is a major problem in the United States (BRT, 2010). Financial literacy is essential for employees to make sound decisions about their personal finances and be productive workforce members.

Fifth, financial literacy can help promote entrepreneurship. Individuals who are financially literate are more likely to start their own businesses and create jobs (Lusardi & Mitchell, 2007).

There are a number of ways to incorporate financial literacy into the school curriculum. One approach is to offer stand-alone courses in personal finance. Another approach is to integrate financial education into existing courses such as math, social studies or business. A third approach is to use real-world simulations that allow students to practice making financial decisions. Whatever approach is used, it is important that financial literacy education starts at an early age and is offered throughout the school years.

The case for teaching financial literacy in schools is clear. Financial literacy is an essential life skill that can help reduce income inequality, prevent financial crises and promote entrepreneurship. It is time for our schools to give students the knowledge and skills they need to succeed in the 21st century economy.

References

BRT (2010). The Case for Financial Education in the Workplace. Business Roundtable. Available at: http://www.businessroundtable.org/sites/default/files/Financial%20Education%20in%20the%20Workplace_FINAL_080510.pdf

Lusardi, A., & Mitchell, O. S. (2007). Financial literacy and retirement planning in the United States. Business Economics, 42(1), 35-44.

NEFE (2012). NEFE High School Financial Planning Program 2012 Savings Survey. National Endowment for Financial Education. Available at: http://www.nefe.org/Portals/0/docs/research/ NEFE_HSFPP_2012_Savings_Survey.pdf?ver=2013-07-17-173123-000