In 2021, just under 50 percent of teens surveyed didn’t know what a 401(k) was. Multiple nationwide studies on financial literacy have demonstrated that students in today’s education system don’t know what to do or how to handle their money in responsible ways, and they openly want to learn how.
The Connecticut public education system mainly offers coursework in financial literacy as an elective subject. As a result, thousands of students graduate high school without foundational financial literacy and money management knowledge. Connecticut public education’s current status quo, which only requires school districts to offer financial coursework, is not enough. The Council for Economic Education ranked Connecticut in the lower tier of financial literacy measures and a Champlain College report gave Connecticut an F grade for producing financially literate high school graduates.
A bill currently going through the Connecticut General Assembly, H.B. 5549: An Act Concerning the Inclusion of Financial Literacy Instruction as Part of the High School Graduation Requirement, would remedy this.
Our education system teaches students how to calculate velocity and torque, how to solve differential equations, and how to write research papers, yet students are exiting high school with little information on how to handle their money. Financial literacy is the skills and knowledge that help individuals make informed and effective decisions about their finances.
A society with higher financial literacy has citizens who maximize their finances and have resources to fall back on during economic difficulties. For students, financial literacy coursework means learning, before they officially enter adulthood and must handle their own finances, what the best ways to spend, save, and invest are. A 2021 survey concluded that 86 percent of teens were interested in investing, but 45 percent said they did not because they were not confident in doing so. And 73 percent of the surveyed teens also indicated that they want more personal finance education.
Adding personal finance coursework as a mandatory requirement will provide students with insights into the financial skills to combat economic crises — and even difficult individual financial periods.
HB 5549 would require all Connecticut high school students to complete a course in financial literacy; this will strongly help Connecticut improve its education rankings and will benefit students’ financial behaviors by informing them of financial risks and heightening their understanding of common financial tasks.
Research has shown that students who have received financial literacy classes experience improvement in financial decisions and savings habits. Individuals with higher financial literacy spend about 18 percent less of their income and set aside 23 percent more money for a three-month emergency fund than those with lower financial literacy. They are also less likely to have late fees, less likely to have take-out payday loans, and less likely to make only minimum credit card payments.
Required financial literacy coursework would provide students entering college with a greater understanding of their loans, expanded knowledge on how to utilize federal grants, and greater comprehension of saving and investment. This bill would help Connecticut young adults thrive.
Adding financial literacy as a school requirement will also positively impact other areas of students’ lives. Studies have shown that financial instability can be linked with mental health problems and that financial stress is the number one reason for stress in most individuals’ lives. People with higher stress due to finances are also more likely to have compromised immune systems, acquire digestive issues, and have other health issues. The implementation of this bill would therefore not only improve their future financial position, but it would also make strides in improving the mental and physical well-being of everyone in Connecticut.
Other states have already implemented the framework of HB 5549 with promising results. Just three years after requiring financial literacy coursework, Texas, Georgia, and Idaho saw higher credit scores and lower delinquency rates. Many states are similarly following this progress. As of 2022, 21 states currently have or have passed a bill requiring personal finance coursework before high school graduation via a financial literacy course or other mandatory courses. There is growing recognition of the importance of financial literacy nationwide, and Connecticut should be next to provide this service to its students.
To get involved with this movement and provide students with accessible and mandatory financial literacy coursework, speak with members of your school district regarding making financial literacy coursework mandatory to show public support for the goals of HB 5549. Also, reach out to your representatives (which can be found on this website. Contacting your representatives is the best way to push this bill forward and display your interest in students’ future financial well-being and stability.
Jasmine Garcia lives in New Haven.