Are Today’s Students Prepared to Make Financial Decisions?

Visual Capitalist |

Chart: Are Today's Students Prepared to Make Financial Decisions?

Are Today’s Students Prepared to Make Financial Decisions?


In the “old days”, personal finance seemed so much more straightforward.

Wages were good enough so that almost anyone could save, and the power of compound interest did the rest. At the same time, it was cheap to get into the housing market, people were more conscious about debt, and the stock market was a no-brainer.

In today’s world, it’s not always so easy. Ultra-low interest rates have fueled a boom in debt and asset prices, making everything from houses to stocks very expensive. Meanwhile, students have accumulated $1.45 trillion in student debt, and grads will be squeezed for years attempting to pay it all off.

The Bold New World

In this challenging new landscape of personal finance, future generations would likely benefit from learning the basics around saving, making budgets, and investing, as well as how to evaluate major personal finance decisions like buying a home or paying for a college education.

Today’s chart looks at one facet of this, which is the percentage of high schools that currently require some sort of personal finance course to graduate.



Using data from a study by financial literacy non-profit Next Gen Personal Finance, it’s clear that the vast majority of students in the U.S. are not required to learn these basic skills and concepts – and things are particularly worse off in lower-income communities.

Access to Financial Literacy

After analyzing data from high schools representing over 85% of all students, the main conclusions of the study were as follows:

  • Only 16.4% of U.S. students are required to take a personal finance course to graduate high school.
  • Five states do have a personal finance requirement: Alabama, Missouri, Tennessee, Utah and Virginia.
  • But outside of these states, the proportion of students with a personal finance requirement drops to 8.6%.
  • Meanwhile, only 5.5% of low income schools (outside of mandate states) have personal finance as a requirement.

Why is this Important?

To understand why financial literacy is important, look no further than the most recent grad class: millennials.

With $1.45 trillion in student debt, millennials find themselves in a tough spot to begin with – but 45% regret even taking out loans to that extent in the first place. At the same time, only 24% of the generation demonstrates “basic” financial knowledge, while 70% are already stressed about saving for retirement.

A better financial education could definitely help change some of these figures, whether it is through schools, or through vastly improved online resources that students access on their own volition.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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