By Gene Natali
This spring, 130,000 Pennsylvania students will graduate high school, and the vast majority of these students will have never taken a personal finance class in school.
Of the Commonwealth’s 500 school districts, less than 50 require personal finance course for graduation. That is why we need to pay House Bill 242, now under consideration in the state legislature.
According to Next Gen Personal Finance’s 2021 State of Financial Education Report, only 1 in 7 Pennsylvania high school students is guaranteed to take a personal finance course before they graduate.
In 2018, the Financial Industry Regulatory Authority (FINRA) presented the results of a National Financial Capability Study. In Pennsylvania, 67 per cent failed to answer more than 3 of 5 basic financial literacy questions correctly.
I believe there is a correlation between this lack of education, and national finance statistics, including:
- 77 per cent of Americans are stressed over finances
- 69 per cent of Americans are living paycheck-to-paycheck
- 54 per cent of American households spend more than they make each year
Is this financial reality simply the result of us “not being taught?” I can’t say for sure, but my hypothesis is “yes,” it plays a large part.
Student loan debt is a legal obligation, and credit card debt is a dream killer. Pension funds are increasingly rare for new grads. And when it comes to investing, age is the most meaningful factor. An understanding of each should be taught in Pennsylvania’s high schools.
Our money choices have consequences, not all of which are negative. What opportunities will the Class of 2022 miss out on, not knowing what a Roth IRA is, opting out of a 401(k) employer match, or thinking that trading and speculating with a Robinhood account is investing?
I serve as Chair of Penn State Behrend Center for Financial Literacy. Since 2016, the center has measured the classroom efficacy of teaching personal finance in Pennsylvania High Schools. The results leave little to debate.
When personal finance is taught in the classroom, students graduate better educated, better prepared and more confident.
Are these results enough to influence change? I hope so. Imagine if every Pennsylvania student graduated with an understanding of Roth IRAs and retirement savings!
Now consider the opposite of “knowing” and understanding common money choices. A friend I spoke to a couple of years ago asked how his 401K was doing. “Neither I nor my firm manages money, and I had no way to know about or access this friend’s 401k statement. I asked him if he had checked his statement, and he admitted he had not and did not know how to.
I got a phone call a week later, and my friend told me he doesn’t even have a 401(k), as his boss told him he never signed up for one.
It is difficult to measure the cost of missed opportunities and lost time. To help make that math easier, I suggest we don’t delay.
Each year since 2015, Pennsylvania has proposed a bill very similar to this in the House and Senate and it gets referred to the Education Committee and then never has a hearing.
Parents, teachers and students, now is the time to contact your representatives and voice your support for House Bill 242. It’s not just important, it’s imperative!
Gene Natali is co-founder and CEO of Troutwood, a financial technology company founded out of the Carnegie Mellon University Swartz Center for Entrepreneurship. He is a Chartered Financial Analyst, board member of CFA Society Pittsburgh, and a part-time lecturer at the University of Pittsburgh, where he has taught Personal Finance since 2016.