This article originally appeared in the Dallas Morning News:
Financial literacy essential for Texas students
By Pamela Yip
Published: 05 April 2015 09:12 PM
Updated: 05 April 2015 10:36 PM
April marks the start of Financial Literacy Month, so it’s a good time to ask how we’re doing at educating young people in the basics of money management principles and math.
“Overall, I see good things happening,” said Nan Morrison, chief executive of the Council for Economic Education in New York. “Two years ago we published a set of national standards for financial literacy. Those were adopted in four more states last year. Once you have standards, it’s the starting point for making sure that good curriculum can get developed in a state.”
In Texas, we’re fortunate that schools have a clear mandate to provide financial education to students.
Texas is one of 22 states to require that students pass economics to graduate from high school. The one-semester course now includes lessons on financial literacy and paying for college, said Laura Ewing, chief executive of the Texas Council on Economic Education.
“While these additions are important,” Ewing said, “they should be the culminating lessons as we send students into the world to earn a living. Instead, they were the only financial literacy lessons that students were required to take, and they were too little, too late.”
But after the implementation of a new law last fall, students in kindergarten through eighth grade are now required to take financial literacy lessons, she said.
Still, much needs to be done.
Texas ranks 42nd overall in financial literacy, according to WalletHub, a personal finance website.
“For Texas, the biggest issue is the percentage of unbanked households, and even more so than that, it ranked 47th for the amount of nonbank borrowing individuals,” said Jill Gonzalez, WalletHub spokeswoman.
The unbanked are people without bank accounts. Texas ranked 41st in the percentage of unbanked households.
“Texas’ ratings are abysmal, as usual,” Ewing said. “However, I have great hope that recent Texas legislation and action by the Texas Education Agency and the State Board of Education will begin turning around consumer spending and saving.”
It’s best to get to kids when they’re young and can build a strong foundation in financial literacy.
Consider the findings of a recently released survey of 43,000 college students by Higher One, which markets financial services to colleges and students, and EverFi Inc., an education technology company.
The survey found that students are taking out more and larger student loans, yet feel less prepared to manage their money than any other aspect of college life. Also, although students reported a higher level of financial experience than in previous years, they didn’t report higher levels of responsible financial behavior.
The benefits of financial education are clear.
A January study funded in part by the FINRA [Financial Industry Regulatory Authority] Investor Education Foundation found that students in states with financial literacy requirements had higher credit scores and did a better job of repaying debt when they became young adults.
Texas was one of three states evaluated by researchers from Montana State University, the Federal Reserve Board and the Center for Financial Security at the University of Wisconsin-Madison.
“We are able to demonstrate that more rigorous state mandates, such as in Georgia and Texas, have a greater effect on subsequent financial well-being for young adults,” the researchers said.
All the more reason why we can’t let up on requiring financial literacy in schools.
Follow Pamela Yip on Twitter at @pamelayip.