With the recent announcement that middle schools in the state of New Jersey will be soon requiring a course on financial literacy, a new standard has been set in regard to the importance of teaching our children how money works. New Jersey was already one of just 17 states that require graduating high school students pass a financial literacy test, however, this is the first time a state has directed middle-schoolers to know their pennies and dollars too. And it’s about time!
For years we’ve (the BusyKid team) been preaching 1) students must take one year and pass a test on personal finance (not economics or accounting) in order to graduate, and 2) that students in middle school should be required to take (and pass) one year of personal finance. Taking just one class, or as some states currently ask – one semester, does no good if passing a test isn’t required to meet a national minimum.
Currently the United States ranks 15th globally in financial literacy. However, we probably rank first (if there are rankings) in total debt ($21.8 trillion), college loans ($1.5 trillion) and credit card debt ($1.04 trillion). While the high debt can’t be contributed to just poor financial education, it probably doesn’t help. If you don’t understand the ramifications of a bad decision, do you really care that you’re making one?
It’s important that more states join the financial education movement to help our children be prepared to face critical financial decisions in their lifetime. However, in-class education can only do so much. Our kids need to have hands-on experience and a solid routine to take what they learn in class into the real world. Good drivers don’t just walk out of a driver’s education class, they must practice and take a test behind the wheel.
In a recent survey from the Edelman Financial Engines’, 90% of parents with children ages 4 to 8 feel it is extremely important that their kids grow up with good financial habits. Further, 91% of these parents felt that they themselves are the ones who should teach their children about money. Here’s the funny part …. 49% of parents surveyed said they don’t know how to discuss money in ways they think their child would understand.
So now what?
Here’s what we think:
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