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Jeff Rawlings
Collin Hull
English 2010
9/30/13
Financial Literacy, an American Struggle
Financial Literacy (having a knowledge about money and how to use it effectively) is a
subject that is not understood by many Americans today. The issue of many Americans being
“financially illiterate” is a controversial subject in relation to where the education process should
take place. Some say that personal finance education should be taught in schools, others say that
educating children on financial matters should take place in the home, and still others say it’s
learned through real life experiences. In the year 2009 a survey was done by The National
Foundation for Credit Counseling that stated, “41 percent of U.S. adults, or more than 92 million
people living in America, gave themselves a C, D, or F grade on their knowledge of personal
finance, suggesting there is considerable room for improvement”(par. 1). After reviewing this
statistic, it shows that most Americans aren’t overly confident in their financial education.
Financial literacy is a struggle today in many ways. Many individuals have never learned how to
establish credit, how to take out a loan, what insurance plan to get, and many other essential
financial lessons that are used on a daily basis. Many individuals face financial crises’
throughout their lives whether it’s being in credit card debt, not being able to pay mortgage
payments on a home, or not having enough insurance. This common financial ignorance and
other financial struggles can be aided by additional financial education. Regardless of where
financial education takes place, financial illiteracy is something that needs to be treated.
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Financial Education In Schools
Some argue that financial education should be taught in schools. As a country as a whole
there are only a few states that actually require a personal finance class in order to graduate. In
2011, Survey of the States did a survey on how many states required a personal finance class in
order to graduate and the results are as follows, “the number of states that require students to take
a personal finance course as a high school graduation requirement remains at 13.”(par. 6) This
statistic tells us that only 26% of high schools in America require personal finance in order to
graduate. There are some individuals that believe that a lot of the financial struggles we face as a
country could be aided if there was a required personal finance class in our high schools. In
2009, Byron Clemens a teacher at the Gateway Institute of Technology appeared in the American
Teacher Magazine and said the following about how personal finance courses are essential in the
public school systems.
Americans' high bankruptcy and home foreclosure rates, heavy use of credit cards
and low rate of savings suggest that educators should play a role in preparing
students for managing their finances. Mandating a personal finance course for
high school students is the right course for these challenging times. (par. 1)
The issues that many Americans face such as credit, debt, and bankruptcy for example,
according to some could be better handled with more thorough financial education in the school
systems. Clemens feels that financial education within schools
will help prepare students for the times we live in.
Fig. 1: Financial literacy may be obtained in the classroom.
However others argue that high school students often times
are interested in anything but school. Most students have never had to pay the bills, so they
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haven’t been concerned with their personal finance knowledge. In a U.S. News article about
teens and financial literacy, reporter Laura McMullen highlights the preoccupied mindset of
students. “Most high school students don't spend their time fretting over mortgages, stock prices,
or their 401(k) plans, but they are at an age when smaller financial responsibilities start creeping
into their lives”(par.1). There are those such as McMullen who believe students are worried
about other things way before personal financial knowledge. It’s not unknown to anyone who
has been to high school that students may lack motivation to learn about math let alone personal
finance. Some feel that this financial education may not even be aiding high school students.
According to Professors of Economics at St. Cloud University and University of Nebraska,
experimentation needs to be done in order to prove teaching personal finance classes are actually
beneficial, “If states, school districts, or teachers want to allocate more instructional time and
resources to financial education in high schools, more research is needed on its potential value to
justify those allocations”(Walstad, Rebeck, and MacDonald 357). Some question mandating a
personal finance class because they feel it’s not proven to be effective. Even if eventually the
school systems began to require more education on personal finance would it better the
American people’s situation on financial illiteracy? Only time will tell.
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Financial Education In The Home
There are some out there who feel that financial education in the home is the way to go.
In the Home there are financial lessons to be learned on a daily basis. This “real life education”
can take place at the grocery store, bank, fast-food restaurant or even when parents are paying
the bills. In an article written by Luke Landes, founder of Consumerism Commentary, a popular
personal finance blog who has contributed to pieces in the U.S. News and Forbes, states his
opinion on how teachers aren’t qualified to teach personal finance and how that knowledge needs
to come elsewhere for youth.
Teachers are not trained in personal finance. In most cases, teachers become
certified to teach subjects through pedagogical education in college in their
particular subject area. History teachers likely studied history education and math
teachers studied math education. When was the last time you saw a college offer a
bachelors or masters degree in money management or money management
education? Economics and accounting won’t qualify. (par. 5)
Landes feels that the educators in the public schools systems aren’t qualified to teach the subject
of personal finance due to a lack of education on the subject. There are many different opinions
on what to teach individuals about personal finance and some feel that teachers aren’t prepared
to teach this course. Many individuals believe that financial education should come from within
the home. Also according to Landes, “Parents can and should teach life-learning skills like
money management, a topic that requires no textbooks and no special training”(par. 7). Parents
can be candid about their finances while teachers would have to use different application to help
students learn the subject matter. This way of thinking relies heavily on the parents in the home
being proactive with involving their kids with financial decisions and planning. For some
parents this comes naturally but for others it may be quite difficult. In some cases for parents,
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teaching their children about personal finance may get neglected and not taken seriously. In
other cases this teaching from parents may benefit children immensely.
Fig. 2: Financial education can come through parents.
Financial Education Through Real
Life Experiences
Some say that financial literacy is obtained
through life experience. The hard times that we face today have much to do with people making
poor decisions with their money. Some feel that people begin to care about their finances as
soon as they start having issues. Researchers for the Journal of Education for Business feel that
these issues may be a desire for more, debt, bad credit scores, bankruptcy, etc. The recession
that the U.S. is going through now is as bad as it’s been since the Great Depression. This has
resulted in higher unemployment rates, dissolved retirement accounts, and major changes in
spending habits (Hite, Railsback, and Donald 253). Some people feel that in life the only way to
learn things is through experience. When someone is forced to change their spending habits
because of poor financial decisions earlier in life, they learn not to repeat that again down the
road. In a book written by author and C.P.A Michael B. Rubin he talks about these financial
mistakes that everyone can make. “Lack of financial education results in a large number of
stupid financial decisions being made by a large number of people. At least that’s what I used to
think. Now, I believe many of these financial decisions aren’t so stupid after all” (2). Some, like
Rubin feel that if people learn from their mistakes and don’t repeat them, they will be much
better off financially. Personal experience in any field can help individuals learn. There are
others like Rubin who have learned personal financial lessons through experience such as James
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B. Stewart Harvard graduate, lawyer and co-author in the book, The Smart Money Guide To
Long-Term Investing recalled a mistake he had in relation to the stock market. “Over the years
that I’ve been investing, I’ve learned some of these lessons the hard way. After the 1987 crash, I
held on a few days, then panicked when the initial rally collapsed. I sold at exactly the time I
should have been buying” (pg. x). No matter how experienced or inexperienced you may be,
everyone has the chance to make bad choices financially sooner or later. What matters is how
you learn from your experiences and become more financially literate as a result of your error.
Where We Stand Today
Today, Americans as a whole have many financial issues and struggles. These issues
may be within our government, businesses, or even within our own home. Regardless of where
they occur, America is in need of financial education at an earlier age. This education may come
through school, the home, or through real life experiences. Financial Literacy is a subject that is
still not understood by many Americans today and the best way to educate the people on
personal finance is still an ongoing debate.
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Works Cited
Clemens, Byron, and John Ameser. "Should Financial Literacy Courses be Required?" American
Teacher 2009: 3. SIRS Issues Researcher. Web. 19 Sep. 2013.
Finch, Huang, and Stewart. The Smart Money Guide to Long-Term Investing. Canada: John
Wiley and Sons Inc., Hoboken, New Jersey, 2002. Print.
Hite, Nancy Groneman Slocombe, Thomas Edwin Railsback, Barbara Miller Donald. “Personal
Finance Education in Recessionary Times.” Journal of Education for Business 86.5
(2011): 253. Masterfile Premier. Web. 19 Sept. 2013.
McMullen, Laura. “Teens should learn personal finance from parents, teachers.” U.S. News. 23
Jan. 2012. Web. 19 Sept. 2013.
Rubin, Michael B. Beyond Paycheck to Paycheck. Portsmouth: Wachtel and Martin LLC,
2007. Print.
“Should High Schools Require Money Management Classes?” Consumerism Commentary.
Consumerism Commentary, 2007. Web. 19 Sept. 2013.
“Survey of the States.” Council For Economics Education. Council for Econ Ed, 2011. Web.
19 Sept. 2013.
“The 2009 Consumer Financial Literacy Survey.” The Nation Foundation for Credit Counseling.
NFCC, 2009. Web. 19 Sept. 2013.
Walstad, William B., Ken Rebeck, and Richard A. MacDonald. “The Effects of Financial
Education on the Financial Knowledge of High School Students.” Journal of Consumer
Affairs 44.2 (2010): 336-357. Academic Search Premier. Web. 19 Sept. 2013.
Images Cited
College Transition Initiative. 2 Nov. 2012. Web. 20 Sept. 2013 (Fig. 2).
Indiana University. 2008. Web. 20 Sept. 2013 (Fig. 1).