Financial habits start forming as early as age 7 (Cambridge University, 2013). Yet, most students don't take a personal finance class until 11th or 12th grade, if at all. By then, their spending habits have already developed.
The numbers tell a concerning story. Only 35 states require high school students to take a personal finance course before graduation. (Council for Economic Education, 2024). Nearly 40% of U.S. high school students cannot access a guaranteed personal finance class. (Next Gen Personal Finance). Despite an overwhelming amount of resources –many free–Americans' financial literacy is declining. In 2009, U.S. adults answered 42% of financial literacy questions correctly; by 2021, that number dropped to 34%. (FINRA)
What's most interesting is that 79% of Gen Z want to learn more about money, just not in the way we may think. (Greenlight).Â
Even though research proves financial education works, several key barriers block progress. What explains this, and what can be done to address it?Â
1. Unprepared Teachers
Assuming a PFL class is required for graduation at a student's school, and it is in 35 states, only 1 in 5 teachers feel prepared to teach personal finance. (Jump$tart Coalition, 2022) Many states lack funding for financial literacy training, leaving teachers to rely on outdated, ineffective materials.
To address this, we need to:
Make Financial Literacy a National Standard:Â Require financial education in all 50 states as a high school graduation requirement.
Fund Teacher Training Programs: Provide educators with free, high-quality curricula from sources like Next Gen Personal Finance (NGPF) and Junior Achievement (JA).
Engage Parents in the Process: Schools should offer tools to help parents integrate financial lessons at home.
Connect students and teachers: Allow parents and teachers to connect through the myriad resources (often free) that connect classroom learning with home discussions
2. Parents Struggle to Fill the Gap
Kids aren't learning this stuff at home, either. Parents, too, feel ill-equipped to teach money management. Only 15% of parents feel "very comfortable" discussing money with their kids. (T. Rowe Price). Two-thirds of parents say they'd rather talk to their kids about sex than money. (T. Rowe Price) More than 65% of parents feel unqualified to teach financial matters. (National Financial Educators Council).Â
This creates a cycle of financial illiteracy:Â
Parents struggle with money →
Avoid financial discussions with their kids →
Kids grow up without financial skills →
The new generation repeats the same mistakes
However, this cycle can be broken. The research shows that parents who commit to their own financial education can significantly improve their children's financial habits.Â
We should encourage parents to learn financial literacy alongside their kids without shame or embarrassment. Parents can read The Psychology of Money (Morgan Housel), or I Will Teach You to Be Rich (Ramit Sethi). They can listen to financial podcasts like The Money Guy Show or Afford Anything on a long road trip with the kids. They can even take free courses like Next Gen Personal Finance (NGPF) or National Endowment for Financial Education (NEFE).
The most important thing is that parents can make money conversations a normal part of everyday life beginning at an early age:
Ages 3-5: Let them count coins and pretend to pay for groceries.
Ages 6-10: Give an allowance and teach saving/spending habits.
Ages 11-15: Open a bank account together and track spending. Introduce financial apps like Greenlight and Zogo to help kids track spending.
Ages 16-18: Explain paychecks, taxes, budgeting, and credit. Play games like Banzai! and encourage kids to play the SIFMA Stock Market Game to learn more about investing.
The bottom line:Â like sex education, money needs to be discussed often, regularly, and in an age-appropriate way. If you wait until kids need the information, it's often too late.Â
3. Outdated Methods
If offered at all, traditional personal financial literacy (PFL) courses often miss the mark. The content is either too abstract, too removed from students' lives, or too limited to be impactful. Even students lucky enough to have qualified teachers teaching personal financial literacy and parents who are comfortable discussing money may still not get the education they need.Â
Today's students learn differently. Gen Z gets nearly 50% of their news from social media, with TikTok being the fastest-growing source. (Pew Research Center) 39% of Gen Z turns to TikTok for financial information, up from 22% in 2021. (Reuters Institute). Over 60% of Gen Z prefer video-based learning over reading. (Pearson Education).
The traditional hands-off, lecture-oriented curriculum model is poorly suited for most learning; it's especially ineffective in engaging students in PFL topics. Research confirms that students retain information better through interactive, real-world experiences (National Training Laboratories, 2021). Moreover, studies show that people must interact with information seven times before retaining it (Marketing Rule of 7). Regular, easy-to-digest short clips are better suited for exposure and engagement.Â
Modern solutions should:
Embrace social media platforms for financial education. We need to start using social media to educate kids. Through short, engaging videos on TikTok, YouTube Shorts, and Instagram Reels, kids will slowly but regularly be exposed to different financial topics. Financial influencers like Humphrey Yang (@humphreytalks) and Tori Dunlap (@herfirst100k) simplify complex financial issues and have gained popularity with Gen Z.
Include gamified learning experiences related to money management as early as elementary school. To improve retention, continue to expose students to simulations, hackathons, interactive budgeting simulations, stock market challenges, and real-world financial tasks. Financial literacy is a skill that must be learned by doing, not watching.
Measure and track financial literacy progress in schools as we do other critically important subjects.Â
Signs of Progress and Ongoing Challenges
The research is clear: financial education works. The tools exist. There's some positive movement. The number of states requiring personal finance education is increasing:
2018: 17 states required a personal finance course.
2023: 25 states.
2024: 35 states.Â