Why financial literacy education in the US sucks

The Nugget

Financial literacy education is lacking in the US, leading to financial instability for many Americans. Despite increased attention, there is still room for improvement in teaching practical financial skills.

Key quotes

"Financial literacy is a lot like, well, literacy literacy."
"It takes time to understand this stuff. You can't just learn the basics in one or two days and then call it good."
"We don't have great records of education standards from before the eighties, when the Department of Education was formed."
"More and more students are receiving the kind of financial education that might stick, spending full semesters learning about things like household budgeting, taxes, credit management, and student loans."
"Financial education really works. It's been shown to improve credit scores, lower delinquency rates, reduce risky payday lending, and lead students to low-interest college financing."

Over half of U.S. adults are considered financially illiterate, contributing to financial instability for many Americans.
Lack of financial literacy is evident with statistics like over $1 trillion in credit card debt, a quarter with no retirement savings, and a third struggling to cover a $400 emergency expense.
88% of adults agree that high schools should require financial literacy courses.

Financial literacy can be determined through a set of questions known as “The Big Three:” interest rates, inflation, and risk diversification.
Understanding these questions requires knowledge of financial vocabulary and the ability to make mental calculations.

Prior to the 1950s-60s, money management was part of the public school curriculum, often taught in home economics classes.
The focus shifted in the late 1950s due to the National Defense Education Act, emphasizing math, science, and foreign languages over life skills like financial education.
Legislation has since made curriculums more focused on standardized testing, leaving less room for financial education.

More states are now requiring financial education for graduation, with some offering standalone classes or integrating financial lessons into existing courses.
Financial education has been shown to improve credit scores, lower delinquency rates, and lead to more responsible financial decisions.
There is optimism that more states will introduce mandatory financial education classes, with bipartisan support in some cases.

💡 Financial literacy is like literacy literacy — it takes time and consistent effort to understand and apply.
📚 More students are now receiving comprehensive financial education that covers household budgeting, taxes, credit management, and student loans.
🏫 Understanding financial concepts early can lead to improved decision-making, lower delinquency rates, and better financial outcomes for individuals and families. Like any skill, practice and education are key.
💰 Financial education not only benefits individuals but also has a positive impact on credit scores, lending rates, and overall financial well-being.

This summary contains AI-generated information and may have important inaccuracies or omissions.