Are you financially literate? Most Americans aren't.
More than 63 percent of U.S. citizens couldn't answer four or more questions of a six-question financial survey correctly, according to the latest National Financial Capability Study by the FINRA Investor Education Foundation. The test, available as a self-assessment on FINRA's website, lets you see how your knowledge stacks up in your state and across the nation.
If you don't like your results, it might be because you never learned how to be financially savvy in school. Only 17 states require students to take a personal finance course and just five mandate a full semester of financial education.
Just in time for Financial Literacy Month, here are six things schools should teach your kids about finances.
Kids as young as pre-K can learn about earning and spending money, according to lesson plans on the Visa Practical Money Skills website. The lessons start with letting kids spend play money for food items, toys and snacks. Along the way, they learn about decision-making and how to identify coins and money.
Later lessons help kids recognize that money is earned, not given, and incorporate work efforts at home and school to help them earn rewards. Hands-on lessons also help them learn the value of real money.
Kids attending pre-K programs not only score higher in math and money skills than their peers, according to the Center for Public Education, but there are financial benefits too. The Center notes that kids in pre-K programs had less need for special education services, less delinquency and less dependence on public assistance in states that monitored such statistics, translating to a financial win-win for both individuals and the state.
Saving and Investing
By grades 3 through 6, kids can learn to score bargains and save and use money responsibly. They're also ready for rudimentary lessons about the power of investing money.
Kids don't have to just learn about investing as something they can do when they grow up. Kids earning money from jobs like shoveling snow or babysitting qualify to contribute to a Roth IRA as long as an adult manages the account.
Grades 3 through 6 are also ideal times to teach kids comparison shopping. The Practical Money Skills lessons use children's developing math and judgment skills to help them analyze cost-effective shopping and the influence of advertising.
The Cost of Living on Your Own
Nearly as many young adults ages 18 through 34 live with their parents as they did in 1940 following the Great Depression, a 2016 report by Pew Research Center shows. However, kids can easily learn "adulting" skills while they're still minors.
By grades 7 and 8, the Practical Money Skills curriculum has students thinking about what happens financially once they leave the nest. The "Living on your Own" segment gives kids a real-world outlook on what it might cost to move out, furnish an apartment and budget to meet expenses.
Schools in Maine recently considered bringing back classes like Home Economics and Shop as graduation requirements to help students learn independent life skills. The measure failed because education for the required credentials — known as 700 certification — hasn't been offered in the state for more than a decade. Passing the bill would also require large expenditures to re-equip long-dismantled workspaces.
Banking and Bank Accounts
Understanding the different types of financial institutions and the services they offer is crucial to getting the best value for your banking dollar. Comprehending how to use those services is key.
More than 75 percent of people rarely or never balance their checkbook, according to Statistic Brain Research Institute. That's a mistake that can cost $35 or more in overdraft fees, even if you've checked your available balance on your smartphone.
The confusion over how available balance works costs consumers nearly $14 billion in overdraft fees each year. Introducing curriculum like Visa's Practical Money Skills would help students from junior high through college become savvy about financial products and avoid costly mistakes.
Credit and Debt
The excitement of going off to college blinds many students to the harsh realities of repaying student loan debt. Nearly half of college students believe they'll be able to qualify for loan forgiveness and 64 percent incorrectly think they'll be able to refinance their loan with the federal government.
But student loans aren't the only danger. Cash-poor students receiving credit card offers find it easy to rack up a lot of consumer debt with high interest rates. Add in car loans and young adults can find themselves overwhelmed by debt and crippled by poor credit before they even finish their education.
Kids can learn about the importance of credit and how to use it wisely long before leaving high school. Junior high and high school provide an opportune time to help students understand the three principal types of credit, their responsibilities as a consumer and how to carry a safe debt load.
Although helping students know how to accomplish their financial dreams goes a long way to improving their lifelong financial picture, that's only part of the story. It's important they also know when and how to take action to prevent financial ruin in the case of job loss or identity theft.
Identity fraud affected more than 15.4 million consumers in 2016. People who use online services or social networks are at greatest risk, especially if they do so using public WiFi. However, the risk of identity theft concerns slightly less than half of all Millennials, showing the need for greater awareness through education.
Unexpected life circumstances like job loss, major car repairs or injury make significant impacts on finances. Curriculum like Practical Money Skills will help students know what their financial options are long before the need arises.