The Challenge
Twenty-first-century teens play a significant role in the U.S. economy. Roughly half hold jobs. One-third have credit cards. Each teen earns about $450 a month on average. And taken together, they spend billions of dollars annually. But young people in the United States lack the basic tools of financial literacy. This is worrisome—for them and for the future of the American economy. Recent Brookings Institution research shows that most students aren’t offered financial education until their junior or senior year in high school. This leaves them unprepared for the financial challenges of adulthood.
The benefits of early financial education are vast. Financially literate young people tend to be more careful decision-makers. As they get older, they’re more likely to set budgets, spend wisely, and achieve financial goals. Early financial literacy resonates for a lifetime.
The Solution
The Brookings analysis identifies six recommendations for effective early financial education:
- Start early: Financial literacy education that begins as early as preschool can help children with impulse control, behavior modification, and the ability to juggle ideas.
- Provide participatory learning: Allowing students to learn through trial and error can help them set career and educational goals and improve financial decision-making.
- Encourage parental involvement: Children benefit when parents give them real-world experience with money, such as providing an allowance or taking them to the bank.
- Improve teacher training: Few states give teachers adequate support, funding, or professional development to teach financial literacy. But nonprofits, including the National Endowment for Financial Education, offer conferences, webinars, and workshops.
- Consider race and socioeconomic status: Statistically, students who are Black, Hispanic, or female are less likely to have access to financial literacy training. Educators must recognize these gaps and plan classes accordingly.
- Improve program evaluation: A standardized evaluation, from the initial design to long-term results, is essential. “Knowing what works and for whom,” the Brookings authors write, “is essential to improve financial literacy levels among American youth.”