A September 2013 poll shows a nearly unanimous desire among adults for personal finance to be taught in America’s high schools. In Arizona, that education is completed in a few weeks during high school students’ economics class, which raises the question: Are Arizona students adequately prepared to manage their finances?
The survey, performed by Harris Interactive on behalf of Bank of America, showed 99 percent of adults believe it is important to teach personal finance in high school. Approximately 32 percent of the 1,010 adults surveyed believe they have made poor financial decisions due to a lack of understanding personal finance. Eighty-nine percent believe if consumers were more educated in personal finance, it would improve the U.S. economy.
The Council for Economic Education’s 2014 National State of Financial and Economic Education reported 17 states require personal finance instruction during high school, but only five of them require a personal finance course as a stand-alone graduation requirement.
Rebecca John, an economics teacher at Red Mountain High School in Mesa, spends three to four weeks on personal finance instruction in her economics class.
Although she does not necessarily feel that today’s students are any less financially literate than those in the past, she says she spends more time on personal finance than most economics teachers.
One challenge John faces is keeping students engaged during personal finance instruction. She says students are not interested in long-term investment planning and retirement because they do not connect with the material, thinking it is too far in their future. To help keep them engaged, she stresses teaching financial terminology to students, adding that many are unaware of what a mortgage is or the difference between a credit and debit card.
John adds that she also has to teach her students basic math concepts during personal finance instruction because the students are often unprepared. “(The school district) took out a lot of the basic math by requiring higher math, so there are a lot of basic things (students) don’t get,” she says.
Mesa Public Schools incorporates personal finance into the one-semester economics class required for graduation, which most students take during their senior year. The economics curriculum dealing with personal finance in the district covers topics ranging from career choice affecting income to identifying future investment options and the importance of credit history.
John says the district has helped by offering more training opportunities to teachers this year to help them improve in teaching personal finance.
Help from the Legislature
Sen. Kimberly Yee, R-Phoenix, introduced a bill this year that would allocate $150,000 for the 2015 fiscal year to help train teachers in instructing students in personal finance and economics. SB1101 has passed the Senate and is awaiting a vote by the full House.
“We really do need to educate our students on how to manage their money,” Yee says. “It makes a huge impact on the economy when residents know how to do so. And a number of teachers want to teach personal finance, but they feel they are not well equipped.”
SB1101 is a continuation of Yee’s mission to get strong personal finance education in schools. She got a bill signed into law in 2013 making it a requirement for all Arizona school districts to teach some form of personal finance. Yee, a proponent of local control, left the method of teaching and topics covered up to the individual school districts. Individual districts can decide whether to teach personal finance in an economics class, a math class, a stand-alone class, or in some other manner.
Dennis Hoffman, professor of economics at Arizona State University’s W.P. Carey School of Business, believes an increase in personal finance education could help Arizona attract more employers.
“The productivity of our workforce is the key to attracting businesses. They need enough people to hire in Arizona that are worth it,” he says.
Hoffman says if graduating high school students have basic skills in budgeting, investing and other financial areas, businesses will see more of an ability to hire a productive workforce and make money in Arizona.
“The biggest deficiency in Arizona’s economy is growing a better workforce,” Hoffman says.
Without Arizona possessing capable workers, businesses will not locate to Arizona, which then causes the state’s brightest workers to leave in search of larger, more popular companies. Under all these conditions, he says Arizona’s economy will suffer.
Hoffman says that people who are ill-informed about personal finance develop “phobias and crazy notions” about managing their money, and economic problems can arise from that alone.
When individuals irresponsibly manage their finances, Hoffman says it creates a bad image for Arizona. To fix the problem, he favors an increased education of personal finance, but believes the basic arithmetic used for finance is lacking. He suggests that personal finance education can be incorporated into math classes to increase knowledge in both areas.
Finding time for finance
Michael Petrilli, executive vice president of the Thomas B. Fordham Institute, an organization that aims to improve education for American children, recently spoke during a Greater Phoenix Chamber of Commerce event about the correlation between high academic standards and an improved economy.
He says that when considering all the existing learning requirements, he does not see where schools would find the time to also teach financial literacy. “There is just not enough time in the day,” Petrilli says.
He did applaud current efforts to teach students about finance and to spark interest in pursuing careers in the business and financial industries. Petrilli adds that schools need to do more to provide opportunities for students to learn these skills, but “it can’t be a mandate.”
Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce, however, reiterated Hoffman’s belief that Arizona could lose business if the education system is not improved.
“Prospective employers need an education system that prepares graduates for the business needs of the future,” he says. “Talent is the life blood of the economy.”