Beginning this fall, high school students in Virginia will have another requirement to meet before they can earn a diploma. USA Today reports that incoming freshmen will be required to take courses in financial literacy. Virginia joins Missouri, Utah and Tennessee in requiring core financial education classes, rather than merely interspersing personal finance lessons into pre-existing courses.
Next generation needs an economic wake-up call
As money management gurus have been saying for the past few years, Americans need a solid understanding of core financial literacy concepts to avoid a life of bad money decisions and runaway credit card debt. Large community groups like the Boys & Girls Clubs of America and corporate outreach organizations like the Charles Schwab Foundation have created programs such as “Money Matters: Make it Count” for younger children. That program has brought financial literacy lessons to more than 245,000 kids since its 2004 debut, according to foundation President Carrie Schwab-Pomerantz.
“We feel that if you can get kids on the right track at an early age, they’re more likely going to be financially successful adults,” said Schwab-Pomerantz.
Considering that more 16- to 18-year-olds have an iPod, cell phone or computer than a savings or checking account, the need for education regarding money management is underscored. Buying tech gadgets on credit is a road to lifelong debt if young consumers fail to understand how such things as compound interest can work against them.
Financial education goes to college
Financial literacy advocates believe that the notion that it’s too late by the time students reach college to teach run-of-the-mill topics like sticking to a budget, avoiding excessive revolving debt and investing one’s money is severely flawed. Last year, Champlain College in Burlington, Vt., began offering an eight-part course in personal finance that is now a required portion of the standard four-year general education curriculum. According to John Pelletier, the head of the college’s Center for Financial Literacy, if a student skips out on these core financial education courses, they are blocked from registration for future courses.
Risky recession behavior
A recent University of Arizona study found that the money management strategies of college students before and after the October 2008 crash that signaled the beginning of the current recession become more risky. More students dropped classes, postponed health care and used one credit card to pay off another, a chain of behavior that has continued.
Ted Beck of the National Endowment for Financial Education said that the “rules of the game” when it comes to personal finance and careers have changed. Being able to find a job with benefits and a suitable pension is difficult, and many people can’t even find a job in the first place. With an average student loan debt exceeding $23,000 to serve as a millstone, it’s no wonder financial literacy remains important. Debt must be managed, or it will manage you.