This month we celebrate Financial Literacy Month in an effort to bring attention to this important life skill and encourage all Americans to take charge of their financial health. The key to improving the financial literacy of all Americans is ensuring that our students have access to formal financial literacy instruction at all appropriate stages of education, through the Financial Literacy for Students Act.
The importance of consumer sophistication on financial matters is as critical as ever in today’s complex and rapidly changing economy. Whether saving for retirement, buying a home, financing an education or simply putting away money in an emergency fund, a solid financial education is vital to making smart and responsible decisions. Unfortunately, Americans simply aren’t making the grade. According to Harris Interactive’s 2013 Consumer Financial Literacy Survey only 40 percent of adults say they have a budget and keep close track of their spending. Approximately 60 percent of adults reported that they have not reviewed their credit score within the past year.
{mosads}A survey analyzed by economists Annamaria Lusardi of George Washington University and Olivia S. Mitchell of the Wharton School of the University of Pennsylvania found financial illiteracy most pronounced among the young, women, and the less-educated. Moreover, the 2013 Junior Achievement/Allstate Foundation “Teens and Personal Finance” Survey found that of the 33 percent of teens who say they do not use a budget, 42 percent are “not interested” and 26 percent think “budgets are for adults.”
Financial illiteracy comes with a price. The inability to understand compounding interest rates, the importance of saving for retirement, or the cost of carrying credit card debt hampers all aspects of an individual’s life. Poor financial decisions may bar someone from one day owning a home or weathering a spate of unemployment. And we certainly can’t discount the external costs to society as a whole.
As we work to prepare our students for the 21st century workplace, a consistent approach to financial education in our schools will help our students entering not only college, but also the workforce, be well-prepared and ready to make sound financial decisions.
Under current law, individual states are left to create and implement financial literacy education curriculum and courses in their districts and schools. But according to a new survey from the Council for Economic Education, a majority of the public school students in the United States still are not exposed to economics or personal finance education. The 2014 Survey of the States found that only 22 of the 50 states require high school students to take an economics course and only 16 states require testing of economics concepts. And only 17 states require high school students to take a personal finance course and only 6 require testing of personal finance concepts.
Promoting a financial literacy curriculum in schools is an important piece of a larger strategy to ensure that all Americans are equipped with the tools to make sound financial decisions for themselves and their families.
This is why we are strong advocates of the Financial Literacy for Students Act, which will create incentive grants and encourage states to foster partnerships with community organizations, financial institutions and local businesses; encourage professional development for teachers; and allow for significant flexibility, creativity and innovation in the integration of financial literacy and entrepreneurship education into existing curriculums. The Act will also will support implementation in Title I schools reaching students less likely to have the opportunity to learn financial literacy at home. And organizations like the Council for Economic Education and its state and local affiliates will be ready to help teachers and school districts as they implement financial literacy education in K-12 classrooms.
A financially literate America is a strong and secure America, and to ignore the problem of financial illiteracy is to shortchange our children and ourselves. We urge everyone, of all ages, to take some time not just this month, but every month, to seek out financial education opportunities in their area and take control of their financial health.
Cartwright has represented Pennsylvania’s 17th Congressional District since 2013. He sits on the Natural Resources and the Oversight and Goivernment Reform committees. Morrison is president and CEO of the Council for Economic Education. She directs all activities of the CEE and works closely with affiliated state council and university centers, in an effort to bring economic and financial literacy into the lives of our nation’s young people.