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Personal Finance: Are Children Learning Enough?


New research shows that children who learn about personal finances early on are better at handling their money as adults. A study by the Federal Reserve showed that when kids are taught in school about personal finance, they tend to develop better personal finance habits and have higher credit scores in adulthood. This is certainly understandable given how little knowledge and experience many young adults have when it comes to budgeting their expenses and the benefits of saving early. Young adults are most likely unaware how credit cards really work, where paying only the minimum payments on credit cards will end up ultimately accruing substantial interest charges and taking several years to pay balances in full. Many parents assume these lessons are covered at some point in school and simply let their kids learn from their own mistakes.

Unfortunately, children typically do not learn financial literacy in school, so the responsibility of teaching children about money falls on the parents. Yet most parents are reluctant to discuss personal finance topics with their children. Some parents feel unqualified for these conversations and some are concerned that discussing money will only make their children feel worried. In a recent T. Rowe Price survey, about 72% of parents confirmed that they did not feel comfortable discussing personal finances with their children. Over half (58%) figured that letting their children learn the hard way, by making personal finance mistakes and learning from experience, is a good approach. However, only about 20% of kids feel knowledgeable about how credit cards and student loan debt work, and they typically are not ready for the responsibility without any guidance.

Nearly all parents (91%) felt as though it would be more appropriate for the schools to be teaching these subjects, and 75% of parents said a course in personal finance should be a high school graduation requirement. In a separate study, about 89% of teachers agreed with parents that all high school students should be required to learn about finance. Currently, only 17 of the 50 states require a personal finance class in high school. The Federal Reserve