Financial well-being means you can meet your current and ongoing financial obligations, feel secure in your financial future, and are able to make choices that allow you to enjoy life. Financial education is a large factor in financial well-being because it is a key part in laying the foundation for financial knowledge. Financial education is important, but you also need the skill to apply that education. Not only do you need the skill, but you also need access to apply your financial knowledge.
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National standards for financial education
At this time, there is no national curriculum for financial education. However, there are national standards for financial education in schools. These standards define what is to be learned by the end of the school year. Financial education delivery is determined by state leadership. If a state hasn’t set a standard for financial education, school districts within that state have taken financial education into their own hands and created an opportunity for their students to learn with students in well-resourced school districts more likely to receive personal finance instruction.
As of right now, 23 states require students to take a personal finance education course to graduate high school. There’s currently a nationwide building of momentum for financial education in schools. Florida recently passed a law that mandates a stand-alone financial education class, making it the largest state to have such a requirement. Georgia is the most recent state to pass a state-level movement for financial education in schools which means 25 states in the country will have a mandated financial education requirement in the coming school year. The growing trend of states prioritizing financial education in public schools is reassuring.
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Although half of the country is meeting the national standard for financial education, there is still another half of the country that’s not receiving the same level of financial education. Location can play a large role in the furthering of a child’s financial education. If they live in a state that doesn’t offer any education about personal finance, they have to seek out their own education elsewhere. These students may be missing out if their parents don’t have sufficient financial knowledge of their own. If schools aren’t teaching personal finance, many students have to rely on information from their parents to further their own financial education. If you live in a state where your child isn’t required to learn personal finance, you have to become your child’s first financial literacy teacher. Financial education is a lifelong process and it’s never too early to start talking to your kids about money.
COVID’s impact on personal finance
Financial education can increase confidence which helps individuals be prepared for the unexpected financial burdens that life often provides. However, over the last 2 years, the pandemic has hindered many families’ financial well-being. In fact, according to a recent NEFE (National Endowment for Financial Education) poll, 8 out of 10 Americans have said they are stressed by a financial issue, and 7 out of 10 Americans were delaying financial decisions such as waiting longer to retire, and cutting out necessary expenses from their lives. Proper financial education can help navigate these complex times. Having in-depth personal finance knowledge can help you determine where the smartest financial changes should be made, enabling you to keep your family in good financial standing. Even better, if you’re still able to contribute to an emergency fund and invest in your retirement. Always expect the unexpected financially, and don’t neglect your emergency savings.
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How did Americans end financially in 2021?
This past year offered unique financial well-being challenges to Americans, even more so than in 2020. NEFE polled Americans at the end of 2021 and asked them how they were faring. According to the poll, 65% of US adults reported having experienced some sort of unexpected major expense in 2021. This poll was also broken down by demographic, which showed women and Hispanics were affected most by unexpected major expenses in 2021. Nearly half of US adults reported living paycheck to paycheck last year. Overall, there’s been a lot of financial stress coming out of last year into this year.
General consensus of financial education schools
There is a lot of very strong support for a standardized level of financial education, especially in K-12 schools. A poll NEFE released this past April showed 90% of adults want financial education in K-12 schools, either as a stand-alone semester or an overall course. A lot of states provide financial education as a part of another subject, but it’s usually a very small portion of that subject. So, it’s very telling that so many Americans support financial education as a standalone offering in schools. When adults reflect on their own financial education, 80% of those polled wish that could have had proper financial in-school instruction.
It is evident there is strong support for financial education in K-12 schools. With the recent changes in the US economy and the past 2+ years of COVID, the call for financial education has become a trend. If we start teaching children personal finance management early, it will become second nature and they’ll be more able to help guide their own children’s financial knowledge.
The National Standards for Personal Financial Education offers a clear guideline on what subject areas should be addressed in personal finance education. According to a NEFE poll, 75% of US adults consider spending and budgeting to be among the most important topics to teach in personal finance instructions, followed by managing credit (55%), saving (49%), and earning income (47%). These subjects are crucial in an adult’s lives, yet without personal finance education, a child may never learn these skills. This is why the implementation of financial education in schools is crucial moving forward.
There are a lot of things outside of our control that impacts finances. Actively seeking information and continuing to build your financial knowledge has huge advantages. If you weren’t taught personal finance in school, it’s important to build your own financial knowledge. The last few years have shown us that financial education is increasingly important. Being financially educated means you’re more likely to have a savings fund and an emergency fund, which significantly impacted people’s financial wellbeing during the pandemic. Providing in-school financial education to children will change the landscape of their financial future tremendously.