The financial situation in the US has become dire as schools are not adequately teaching students about financial literacy, leading to a myriad of problems. The American educational system has not given personal finance education the attention it needs. Even though some states have launched financial literacy programs, the coverage is frequently insufficient and inconsistent nationwide. According to the Council for Economic Education's 2022 Survey of the States, only 23 states mandate personal finance courses for high school students, and only a few require testing on the topic.
A comprehensive personal financial education is lacking, and this has negative effects on people, families, and society as a whole. Its effects include increased debt amongst the population, lack of retirement preparedness, poor financial decision-making (by the individual), and economic inequality. Many Americans are likely to go into debt, as they do not have strong foundations as to how they should split their money to be used. A recommended rule to follow is the 70/20/10 rule, where 70% of one’s budget should go into necessities and daily spending, 20% should go into saving and investing, and 10% to debt payments. However, despite its utility in financial planning, this rule remains mostly unheeded by Americans.
Many individuals are unprepared for retirement planning, as they are clueless about the different types of retirement accounts. A lack of financial literacy especially impacts low-income individuals and communities. It helps to perpetuate their cycle of poverty since these people have little knowledge of budgeting and investing, and are thus unable to conserve or grow their money.
To address the pressing need for personal financial education, the government can improve school curriculums, devote more resources to preparing teachers, host community-based programs, and have industries themselves teach people about financial literacy. Schools across the nation should incorporate personal finance courses as a mandatory part of the curriculum. By starting financial education at an early age and gradually building upon the concepts throughout a student's academic journey, we can cultivate a generation of financially literate citizens. Financial literacy classes in high school should be mandatory. To properly teach personal finance topics, teachers must receive the proper preparation and materials. Teachers who have access to current resources, workshops, and specialized training programs can give high-quality financial education. School, local government, and community organization partnerships can assist close the financial literacy gap. They can host workshops, seminars, and online events to promote financial literacy. Financial institutions, organizations, and industry professionals can all work together to create and support financial education projects. Collaborations between financial institutions and educational institutions can give students and the broader public access to important knowledge, tools, and real-world perspectives.
Lacking personal finance education is a serious problem in the US with far-reaching effects. We can arm people with the knowledge and abilities required to make wise financial decisions by prioritizing financial literacy and taking proactive steps to promote personal finance education. Financial literacy may increase economic stability, lessen inequality, and promote general well-being for both individuals and society. We must collaborate to close this knowledge gap and create a culture of financial literacy.
