Youth financial literacy in the United States: A patchwork approach

Abstract

While the financial well-being of Americans has generally increased since the last recession, the latest survey results from FINRA indicate a national population that is still struggling to meet its financial obligations, save for retirement or effectively manage debt. Absent a national educational policy, the American experience of financial education is dependent upon state and local mandates. The majority of states require financial literacy standards K-12, but a smaller number require those standards to be implemented; a much smaller number require testing on the standards. In addition, the question of financial literacy's efficacy remains. While behavioural change is the gold standard, financial education's effect on subsequent behaviour is difficult to ascertain. Definitive statements concerning its efficacy with respect to knowledge improvement are also challenging, given the myriad methodological issues surrounding past research. The future of financial education in the US suffers from a willing spirit, but a weak body. Inclusion of financial education in school curricula receives overwhelming support from teachers, parents and policy makers; the decentralized nature of the American education system makes such implementation difficult. Two possible approaches include integrating financial education into the widely adopted Common Core standards, and implementing a "Smart" state model, first developed in Tennessee and being implemented in other states. The ultimate solution for financial education delivery in the US is to increase the rigour around the conceptualization and construction of its curriculum, elevating its status from a set of skills to a body of knowledge, putting it on par with other, more traditional disciplines.