Why Finance Isn't Taught in School (And How to Raise Money-Smart Kids) (2024)

Do you remember Personal Finance 101? I don’t. Because it didn’t exist.

It doesn’t exist today in the majority of schools.

A astounding 99% of American adults agree finance should be taught in the classroom, and you still won’t find it in… about 99% of schools (I made up that second figure, but I dare you to find a public school in your town that teaches a real finance class).

Why Finance Isn't Taught in School (And How to Raise Money-Smart Kids) (1)

Why Isn’t Finance Taught in School?

Financial journalist, Dan Kadlec, pointed out a few reasons why finance isn’t taught in schools,1 including:

  1. Only one in five teachers feels qualified to lead a personal finance class
  2. We don’t have enough instructors to teach finance classes (see reason #1)
  3. Personal finance isn’t part of the ACT or SAT – if it’s not tested it’s not taught2
  4. Education is up to the states, not the feds, and each state has different ideas
  5. There isn’t much agreement as to which finance concepts would be taught

It’s hard to pinpoint the real reason personal finance isn’t taught in schools, but the fact remains: financial education for children is the responsibility of the parents.

This is another problem, because if most teachers don’t feel qualified to teach finance classes, how do you think parents feel?

Most Parents Need Financial Help

According to a 2012 study, 80% of U.S. adults say they could use help with financial questions.3

And it seems to be getting worse.

Just talk to your neighbor, a colleague, or the first person you see on the street, and see how they’re doing with their finances. Or just look at how much the average person has in savings:

Why Finance Isn't Taught in School (And How to Raise Money-Smart Kids) (2)

If we’re responsible for teaching financial skills to our children, we need to get our finances together. It takes some self-education, but it pays off in the end (pun intended).

When parents are bad with money, the cure-all is typically: “go to college and get good grades so you can get a good job,” but this alone doesn’t solve the problem.

There’s an assumption that people who earn a lot of money have a lot of money. Take doctors, for example: the average person would assume most doctors are financially well off, but that’s not always the case. According to doctor and writer, Sanj Katyal, MD, most doctors have no clue what they’re doing with their money.4

It’s common for someone who isn’t doing well financially (and didn’t go to college) to think the answer for their children is simply to go to college.

It goes something like this, “Go to college like I never did so you’ll be successful.”

It seems legitimate, and I’m sure the intentions are outstanding, but that doesn’t mean it’s the right answer.

There is nothing wrong with college, but we have to prepare our kids to handle their finances before they leave for college. Unless they’re going for a finance degree, college won’t teach your children much about money either. They could end up with a high income and no clue how to handle it (just look at the typical NFL or NBA player… or doctor).

The issues stems from the fact that we don’t talk about money.

The Taboo Topic of Money

As children, we’re taught to never discuss our personal finances. Money is a private issue — a taboo topic. You don’t discuss your income, your investments, or your savings.

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Never. Talk. About. Money.

Sadly, a common view.

This is why kids know absolutely nothing about their parents’ financial situation. This leads to adults who know nothing about finances in general. And that’s where most people stop.

Honestly, that’s where most people are right now. They’re struggling to make it, afraid to ask for help, because they don’t want anyone else to see their financial situation.

So many couples have asked for my help, but when it came time to look at their finances, they backed out. It can be embarrassing. I’ve been there: in thousands of dollars of debt, afraid for anyone to see my finances on paper. I know it’s tough. But you can’t just do nothing. You have to learn how to handle money for your children’s sake if not for yours.

Financial Literacy in the Next Generation

You may be a parent who feels inadequate to teach your kids about money, but you’re fully capable. You may come from a history of financial mistakes, both personally and generationally, but that can stop now.

Anyone is capable of becoming financial literate. We can equip our children to win with money after we learn how to win with money.

It’s easy to teach financial concepts to kids. And it’s always better for them to learn before they’re buried in $100k of debt. If they start right, they won’t have anything to climb out of.

But how do you teach your kids about money if you don’t know what you’re doing?

You can start learning what you’re doing today. The basics of good finances is easy to learn. Things like not spending more than you earn, investing simply yet wisely, and being prepared for hard times are common sense. But they aren’t commonly taught.

I’ll be publishing a complete book in the fall of 2020 on exactly how to teach your kids about finances. For now, keep reading for some resources you can use today.

How You Can Be Your Family’s Change

Cut off the poor mindset that runs in your family.

Break the generational chains of debt.

Stop the generational addictions that kept your family poor.

Whatever it is. It doesn’t have to continue any longer. You can be the change you want to see in your family tree. Just like any other bad habit, poor financial skills can be fixed.

The generational curse of poor finances can be broken.

You can change everything.

Start by learning the basics of good money management. This will be part of our Parent Finance 101 video in the course coming soon, but you can start today by just reading one book on finances.

There are plenty of great books like The Total Money Makeover by Dave Ramsey or The Wealthy Barber by David Chilton. We have an entire library of recommended books to get you started.

Aren’t much of a reader? I suggest you start. It’s what separates the successful from the unsuccessful.5 But the good news is, you don’t have to sit down and read a book if that’s not your forte.

We’re in the 21st century now. Get an audiobook and listen to it on the way to work. You can get an Audible subscription for about $15/month and intake more books this year than you have since you were born.

Or you could just go to your local library for free. Money isn’t even an excuse to suck at money. You can educate yourself for free. Why not start today?

Check out all of our recommended books and resources to raise money-smart kids.

Continue Reading: 5 Ways to Teach Your Kids About Money if You Feel Unqualified

Further Book Reading

These are some great options to start your financial journey:

Great books to teach your kids about money (until mine comes out 😉 ) :

Editor’s Note: This article was originally published on November 5, 2018. It was actually the very first Freedom Sprout article! Since then, some things have changed, so the article has been updated with more and new information for your reading pleasure. And now there’s a video to go along with it!

Why Finance Isn't Taught in School (And How to Raise Money-Smart Kids) (2024)

FAQs

Why don't they teach finance in school? ›

We don't have enough instructors to teach finance classes (see reason #1) Personal finance isn't part of the ACT or SAT – if it's not tested it's not taught. Education is up to the states, not the feds, and each state has different ideas. There isn't much agreement as to which finance concepts would be taught.

Why is lack of financial education a problem? ›

The lack of financial literacy can lead to many pitfalls, such as overspending and accumulating unsustainable debt burdens. This, in turn, can lead to poor credit, bankruptcy, housing foreclosure, or other negative consequences.

How do you raise a financially literate child? ›

Keep in mind that teaching these skills to your children is a process. Six key topic areas to build upon are: setting goals, earning money, spending money wisely through budgeting, understanding the value of money as you save and invest, using credit responsibly, and protecting assets.

Should kids be taught financial literacy? ›

Teaching kids their money's worth will help them make more educated decisions on spending, investing, and saving. It teaches kids the importance of money management and the value of spending wisely. Financial scams are common and will only continue to grow as technology develops.

What are the disadvantages of financial education? ›

The study found that financial literacy decreases preference for the present, suggesting a positive effect on decision-making and saving behavior. The negative effects of financial literacy include taking too many risks, overborrowing, and holding naive financial attitudes.

Why isn't accounting taught in schools? ›

Another reason for the lack of financial education in schools is that educational decisions are made on a state level. That means there are no federal mandates or guidelines to help schools master the most effective approach to teaching personal finance.

Why is financial literacy declining? ›

In fact, much of the downward trend in financial literacy can be traced back to respondents increasingly selecting “don't know” as their response option to the underlying questions. The rise in “don't know” responses accounts for 75 percent of the drop in financial knowledge from 2009 to 2021.

What percentage of Americans are financially illiterate? ›

Key Findings

Only 57% of adults in the United States are financially literate.

Should money management be taught in schools? ›

When children are not taught financial literacy an early age, this could lead to expensive consequences due to financial mistakes that could have been avoided. Empowering Future Adults: Financial education equips students with the skills and knowledge they need to navigate the complex financial world as adults.

How to raise money for smart kids? ›

Raising Money Smart Kids
  1. An understanding of how money works and how to manage money is one of the most significant gifts you can give your children. ...
  2. Make sure your child has money to manage. ...
  3. Let them know what expenses they must pay for. ...
  4. Don't bail them out. ...
  5. Help your child shop wisely.

How can I build my child's wealth? ›

6 Practical Ideas for How to Make Your Kid a Millionaire
  1. Start a Family Business and Employ Your Child. ...
  2. Open a ROTH IRA for Your Child. ...
  3. Buy an Investment Property When They Are Born. ...
  4. Build Credit Early. ...
  5. Open a UTMA Custodial Account at a Brokerage. ...
  6. Open a 529 Savings Account.
Nov 28, 2023

How do I put my child up financially? ›

Here are four ways you can set your child up for financial success:
  1. Set Up a UTMA Custodian Account. ...
  2. Fund a 529 Savings Plan. ...
  3. Establish an Irrevocable Life Insurance Trust (ILIT) ...
  4. Establish “Funds” and Match Their Contributions. ...
  5. 4 Ways to Lower Your Required Minimum Distributions (RMDs)

What age should you start teaching financial literacy? ›

He recommends teaching five- to eight-year-olds “very, very basic things” like that money has value and how choices made with it have an impact. For eight to 12-year-olds topics can be more complex, Landolt believes. “You can talk about the different types or uses of money.

Why is financial literacy not taught in high school? ›

High schools might avoid teaching personal finance due to several reasons, including the perceived lack of relevance to students' current lives, the gap between financial literacy and financial responsibility, and the practical constraints of traditional teaching methods.

What percent of high schools teach financial literacy? ›

As of March 2023, about 24% of students go to schools that uphold the “gold standard” of personal finance education, according to NGPF, where it's both required and comprehensive.

Should finance be taught in high school? ›

High school is the perfect time to learn personal finance skills because they are just about to start making their own decisions about their own money for the first time. When students learn personal finance in high school, they are able to quickly use their new knowledge in the real world.

Why isn't tax taught in school? ›

The general consensus of why schools don't teach students about taxes is because there are too many variables when reporting income. People file taxes differently and it is considered impractical to teach students about this topic.

Why do people go to school for finance? ›

A finance degree can open doors to a broad range of dynamic professional opportunities — often with high earning potential in diverse industries. Finance majors learn fundamental business skills that can translate to careers in a variety of organizations in the public, private, and nonprofit sectors.

Is finance school hard? ›

Finance degrees are generally considered to be challenging. In a program like this, students gain exposure to new concepts, from financial lingo to mathematical problems, so there can be a learning curve.

References

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