What’s the Value of Financial Education? According to One Recent Study,$100k

Taking one semester of a personal finance class in high school could help the average student save $100,000 over the course of their lifetime; that’s according to a recent report by consulting firm Tyton Partners and Next Gen Personal Finance, a nonprofit focused on providing financial education to middle and high school students.

After taking personal financial courses, students may know how to use checking and savings accounts appropriately, understand the advantages of boosting their credit scores, and know how and why to avoid excessive credit card debt and payday loans.

The report found those who had taken at least one financial education course in high school were more familiar with ways to avoid high interest credit card debt, as well as how to increase credit scores in order to secure better borrowing rates when it came to expenses such as home mortgages, auto loans, and insurance, Tim Ranzetta, co-founder and CEO of Next Gen told CNBC. But then there is the ripple effect, he added.

“Students bring these lessons home,” Ranzetta said. “When you take that $100,000 in savings and multiply it across families and communities, it’s an incredible economic engine.”

Chase Peckham is the Director of Community Outreach at the San Diego Financial Literacy Center (SDFLC). Peckham was not surprised by Next Gen’s findings that taking a financial literacy course would have such a large financial impact on a person’s life. 

“This is corny and cliche but knowledge is power and if they understand just the basics of everyday personal finance they will make choices that can avoid large debts, emotional spending, etc,” Peckham said. 

The number of financial decisions that students have to make increases during and especially after high school, unfortunately many students are not learning personal finance lessons at home, which is why offering these courses is of the “utmost importance,” said Felipe Arevalo, Community Outreach Coordinator at the SDFLC.

“Over 50 percent of parents in this country don’t feel comfortable talking to their kids about money,” said Sean Simonini, founder of the Massachusetts Association of Student Representatives (MASR). 

By initiating early teaching on the topic, students may have more success in achieving financial security before adulthood and share their lessons with family and friends to help them advance their own understanding and make safer financial decisions.

Not only do high school financial literacy courses help students avoid credit card debt, but early financial literacy courses could also help students avoid accumulating overwhelming college loan debt. 

In addition to avoiding unsecured debt and making smarter financial decisions, according to data from the Financial Industry Regulatory Authority’s Investor Education Foundation, students with a background that includes personal finance education may have lower debt delinquency rates as young adults.

Students might be less likely to take on private loans, payday loans, or high-interest credit cards if they’re aware of less expensive options and alternatives, a study from the National Endowment for Financial Education found. They also tend to have higher credit scores.

“In America, wealth is connected with your credit score, because if they don’t have a good credit score, you’re going to get a higher interest rate,” said Shianyisimi Ogede, a North Carolina high school economics and personal finance teacher.

Taking a High School Personal Finance Class Comes With A Lifetime of Benefits

As of March 2024 half of all states require or are in the process of requiring high school students to take a personal finance class before they graduate, according to data from Next Gen Personal Finance. 

Currently, in the 33 states (+DC) without Personal Finance guarantees, just 1 in 10 high school students will take a Personal Finance course before graduation.

Out of the 25 states that require a personal finance class before graduating high school, eight states have fully implemented the financial literacy class, while 17 are in progress. There are another 35 personal finance education bills pending in 15 states, according to Next Gen’s bill tracker.

Financial literacy has been steadily growing in schools in the past two decades, according to Laura Levine, president and CEO of Jump$tart Coalition for Personal Financial Literacy, with the topic naturally getting a boost during periods of economic instability, such as during the 2008 recession and the 2020 pandemic.  

In 2020, eight states guaranteed a standalone Personal Finance course for all high schoolers. That increased to 11 states in 2021, 17 states in 2022, 23 states in 2023.

“This is one of the only classes I’ve really heard of that almost every single student wants to take. You know the old adage, ‘When am I ever going to need this?’ … Every student recognizes very quickly, when they’re learning about budgets and credit scores and insurance, they all say, ‘Oh, OK, I get it. I absolutely will need all of this information when I am an adult,’” said Jessica Pelletier, executive director of FitMoney. “And so, it’s a very easy sell, so to speak, when you’re talking to students.” 

Pelletier speculated the pandemic produced some urgency for educators and parents on financial literacy as the economy plummeted and households struggled with finances.  

“I think those two things combined really made parents and educators together become a very cohesive voice for financial literacy, and so legislators are taking notice [of] what they’re hearing from their constituents, that this is what they want,” she said. 

Levine said the Jump$tart Coalition has had a “National Standards for Personal Finance Education” guide since 1999 “covers investing, insurance, savings, spending, budgeting, you know, it’s kind of a full spectrum.” The most recent version focuses on six areas of personal finance: 

  1. Earning income 
  2. Spending
  3. Saving
  4. Investing
  5. Managing credit 
  6. Managing risk

Increase Your Financial Literacy

Looking to educate yourself on the basics of personal finance? Then our Financial Education Program may be the perfect tool for you!

One great place to start?

Our FREE Smart With Your Money (S.W.Y.M.) workbook, which covers how to create a budget, how to build wealth, ensure your saving enough for your future, and better understand your credit score.

Once you complete the workbook, test your personal financial knowledge with our free financial literacy test.

Learn more about DebtWave’s financial education offerings here

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