According to the The Organization for Economic Cooperation and Development, the United States scores slightly below average in financial literacy among 15-year-olds.
The good news is financial literacy in the U.S. is improving. In 2012, the OECD reported 40 percent of adults gave themselves a grade of C or lower in their personal finance knowledge, up from 65 percent in 2010.
The bad news is the movement to increase teaching of financial literacy in schools has been too slow.
As of 2014, only 17 states have made personal finance a required course in high schools. Of those states, only six require students to pass testing in personal finance to graduate, according to a survey of the states by the Council of Economic Education.
If, according to a survey by the Jump$tart coalition, 93 percent of adults and 86 percent of teens agree personal finance should be taught in high schools, then why are states apprehensive to implement requirements into the curriculum?
It’s no secret the state of education in the U.S. is falling behind on a worldwide level, and schools are under pressure to increase scores in areas like math and science.
Personal finance isn’t a subject that shows up on standardized tests, so if there’s no test, why should they teach it?
The biggest barrier is the availability of teachers. According to a University of Wisconsin study, only one in five teachers felt they were qualified to teach a personal finance course.
While these are significant challenges to having nationwide financial literacy programs, the solution is more involvement from the government at both federal and state levels.
Implementation of a standard personal finance curriculum and investment in our teachers will go a long way in improving the financial literacy of the U.S. However, is investing into financial literacy worth it when we are falling behind in critical areas like math?
The answer is a resounding “yes.”
If the purpose of our education system is to produce young adults who add to our society, then behind reading, writing and basic arithmetic, financial literacy is a skill everyone will use in the real world.
Unfortunately, the government is failing at this, and where the government fails, corporations step in.
While it’s true many nonprofits — most notably the Jump$tart coalition — have spearheaded the financial literacy movement, many large financial corporations also provide their own financial literacy courses.
Companies such as Discover, a credit card company, and BB&T, a bank, have been producing consumer information to improve financial literacy.
The CEOs of these companies proudly boast of their efforts to educate the American people.
However, I am sure the management of these companies will not mention that in 2012 both were tied to corporations, through subsidiaries or parent companies, which were fined for deceptive selling techniques and selling financial products without properly educating their sales representatives.
Luckily, we still have nonprofits looking out for the American people, right?
Look at the partners of the Jump$tart coalition, and you will see a long list of banks, credit card companies and other financial service companies.
I don’t trust McDonald’s leading the health food revolution, and I won’t trust the financial corporations teaching America of correct money management practices.
Personal finance education has to be the government’s job.
Improving financial literacy will have affect not only individual households, but also the entire economy.
Having a high financial literacy means you’re more effective at creating budgets, savings plans and managing debt. This correlates with a higher quality of life and even healthier lifestyles.
Low financial literacy has the converse effect and those households are more likely to have a lower quality of life. These households are also more likely to be in debt.
When these households make poor financial decisions, the cost is placed on the rest of society through diversion of resources with safety net programs like welfare.
I’m not saying that with improved personal finance classes we will start eradicating poverty, but those who have higher financial literacy can be educated consumers in the economy. Educated consumers improve the efficiency and effectiveness of the economy, which in theory should increase the quality of life for everyone who participates in that economy.
As we move forward, the economies of the world will only become more complex. If our future generations are not prepared to handle proper financial decision making, the country as a whole will suffer.
We can blame our lack of mathematics or science knowledge as the reasons for jobs being outsourced and for the recent recessions.
But maybe if we had more knowledgeable consumers fewer people would have been taken advantage of by large corporations who gave out predatory loans that fueled the recession of 2008.
Financial literacy is just as important to our society as math, English and science. It’s time Americans start treating it as such.
Jay is a 20-year-old finance junior from St. Simons Island, Georgia. You can reach him on Twitter @hjcranford.