Letters to the Editor: California will require financial literacy education. Is that a good thing?

2024-07-05
Letters to the Editor: California will require financial literacy education. Is that a good thing?

Empowering the Next Generation: Financial Literacy for High School Students

In a move that aims to address a critical gap in education, California legislators have passed AB 2927, a ballot initiative that will require high school students to receive financial planning instruction before graduation. This decision comes on the heels of a previous bill, AB 984, which failed to gain traction. The public's overwhelming support for this initiative, with nearly two-thirds of respondents in a 2020 Charles Schwab survey indicating the need for financial education in schools, has undoubtedly played a role in this legislative action.

Equipping Students for Financial Success

Bridging the Gap Between High School and the Workforce

While high school students may have the opportunity to explore leadership electives, the reality is that most will enter the workforce for two to five years before considering advanced degrees, such as an MBA, where leadership courses are typically taught. This interim period presents a crucial window for imparting essential financial knowledge and skills that can set them up for long-term success.

Beyond Budgeting and Checking Accounts

The proposed financial planning courses must go beyond the basics of budgeting and managing checking accounts. While these are valuable skills, they do not adequately prepare students for the complexities of personal finance, particularly when it comes to navigating the world of investments and retirement planning. Surveys indicate that a significant portion of 401(k) participants lack the knowledge to make informed investment decisions, despite the availability of educational resources from service providers. This disconnect highlights the need for a more comprehensive approach to financial education.

Reclaiming the Importance of "Pocketbook Economics"

The article's reference to a one-semester "pocketbook economics" course that was previously offered in the Los Angeles Unified School District (LAUSD) high schools serves as a reminder of the historical significance of financial education. This course, which covered topics such as balancing a checkbook and managing credit, had been a staple for several decades. However, the shift towards a "college prep" focus led to the course's demise, a decision that the author argues was a false claim, as there is ample room in a college-bound student's schedule to accommodate such essential life skills.

Expanding the Curriculum: Citizenship Education

The article also raises the idea of making the passing of the U.S. citizenship test, which assesses an applicant's knowledge of U.S. government, history, and geography, a requirement for all high school students. This proposal, if implemented, would not only enhance students' understanding of their civic responsibilities but also contribute to their overall educational development.

Preparing for Financial Empowerment

The passage of AB 2927 represents a significant step towards equipping the next generation with the financial knowledge and skills necessary to navigate the complexities of the modern world. By going beyond the basics and delving into the intricacies of personal finance, these financial planning courses have the potential to empower students to make informed decisions, manage their resources effectively, and ultimately achieve long-term financial stability. As the article suggests, the success of these initiatives will depend on the depth and breadth of the curriculum, ensuring that students are truly prepared for the financial challenges they will face in the years to come.

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