At some level, personal finance is common sense and Ben Franklin-style self-discipline. A penny saved is a penny earned, right?

Sure, but in an era of easy credit, street-corner paycheck advances, and mass-marketed financial services with cute mascots, it is easy to become confused, or overwhelmed. Members of the middle class drive by some of the most discouraging parts of the financial service economy without even noticing it. As California Governor Gavin Newsom has pointed out, "the nation has as many check-cashing and payday loan businesses as it does McDonalds and Starbucks Coffee stores combined." These services are expensive — but for the poor, banks can be even worse.

A little financial prep
makes sense
and works wonders
to help kids get ahead
and head off
money blunders

Strong personal finance habits can help today’s youth turn into adults able to support themselves and those they care about. Self-sufficient adults help the economy by contributing to economic growth. The reverse is tragically common. The role that most schools play in preparing students to understand and navigate personal finance is shockingly limited.

California students generally do not have a class on financial skills. Instead, financial topics are supposed to be "woven into" the curriculum.

California is not very successful at teaching financial skills. In a review of financial literacy education among the 50 states, Champlain College awarded California a failing grade. California lawmakers have taken some notice of this issue by weaving topics related to financial literacy into the curriculum framework for high school students. To be clear: no separate financial literacy course is required or suggested. The topics to be covered across multiple courses include budgeting and managing credit, student loans, consumer debt, and identity theft security.

A full financial literacy course might cover four general areas: Saving and Investing, Credit and Debt, Financial Responsibility and Money Management and finally understanding Insurance, Taxes and Real Estate Debt.

According to the Council for Economic Education, college students who come from states where there is a course required in financial literacy are:

• more likely to budget,
• more likely to be saving,
• less likely to have maxed out their credit cards in the last year, and
• more likely to be paying off their credit cards fully every month.

Most jobs are created in small businesses, where basic financial readiness is a critical survival factor. In 2014, six states required testing of financial literacy according to the Council for Economic Education. California was not among them.

Non-profits try to help

Philanthropies exist to fill the educational gaps, and perhaps readers will comment to help draw attention to more of them.

• BizWorld.org is one organization taking proactive steps to recruit and prepare future entrepreneurs. BizWorld inspires children to be innovative leaders through the teaching of business, entrepreneurship and finance.
• The National Endowment for Financial Education emphasizes programs in high schools located in low-income communities.
• The California Department of Education has collected a pile of links to organizations and services with an interest in financial education.

Some of these points are presented nicely in an infographic from Edutopia.

Next Steps

Financial Literacy starts at home. The Money as You Grow site offers tips and activities sorted by your child’s age to help them understand money. Some basic ideas for pre-schoolers: You need money to buy things. You earn money by working. You may have to wait before you can buy something you want. And a big favorite: There is a huge difference between what you want and what you need. Suggested activities help drive these lessons home.

Want more financial literacy in your school? This a a good topic for your PTA meeting. Find out what is taught at your school. Do teachers have the skills and knowledge to successfully integrate financial literacy into the Common Core? Has your school board identified this as a priority? A resource to share: The Jumpstart 2015 National Standards in K-12 Personal Finance Education.

This lesson concludes chapter 6: "The Right Stuff." The next lesson begins our exploration of "The System." The overall structure of Ed100 is this: Education is Students and Teachers spending Time in Places for learning with the right Stuff and a System with Resources for Success. So Now What?

Updated December 2017
Updated March 2019