Research & Commentary: Financial Literacy Classes in K–12 Education

Published December 4, 2017

As Americans’ financial preparedness continues to decline, some states are trying to reverse the trend by introducing financial literacy standards in their K–12 curriculums.

In 2017, California, Florida, Kentucky, Maryland, Massachusetts, Mississippi, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, and South Carolina introduced legislation related to financial literacy courses. Some of these states are considering bills that would include financial literacy courses as a graduation requirement, while others are considering legislation would direct their state education department to implement financial literacy courses in their K–12 curriculums.

Some states are choosing not to mandate financial literacy coursework but are instead allowing financial literacy courses to satisfy graduation requirements, as indicated in a bill recently introduced in the Pennsylvania General Assembly.

The National Conference of State Legislatures defines “financial literacy” as the focusing “on the specific knowledge and concepts consumers need to manage their money and build wealth.” A National Field Study by the Fannie Mae Foundation described financial literacy as “the ability to read, analyze, manage, and communicate about the personal financial conditions that affect material well-being.”

Research suggests there is a need for financial literacy education. In an online survey of “young people aged 15-18,” conducted by the National Financial Educators Council (NFEC), only 27.2% “achieved a score of [at least] 70%.” The average score of the study was an abysmal 58 percent. NFEC concludes the results of the study “provide clear evidence of the growing need to raise awareness about personal finance topics in the U.S.”

Though financial literacy courses could be useful to many youths, students would benefit to varying degrees. One study on financial literacy found that even if students were to receive “the same amount of and quality of education, not every child or adult will to the same degree be able to use this education for income-generating activities.”

Studies have also found an individual student’s environment, including his or her home and family life, significantly influences a youth’s financial literacy, with minorities “and low-income youth … less likely to have access to mainstream financial systems.” Further, many low-income children and their families “lack checking or savings accounts, investments, insurance and access to employment-based retirement savings.” Due to such great disparities among students, many schools are ill-equipped to provide the personalized instruction required to combat such challenges.

While financial literacy courses are relatively low-cost, as indicated by California’s legislation, which states its program is “not expected to result in significant costs for the state,” state lawmakers should not force additional requirements in their K–12 curriculums. Instead, they should approve legislation that allows for finance courses to be counted toward existing academic requirements.

This is not because financial literacy isn’t important, but rather because the differences between various schools, regions, and households are so vast, that statewide or national standards would fail to account for the unique circumstances students face. Instead of imposing uniform standards on districts across a large region, all students would be better off if local school districts and parents were empowered with the ability to choose which courses would best help students’ educational development.


The following articles provide further information on financial literacy and school reform.

National Standards for Financial Literacy
The National Standards for Financial Literacy, developed by the Council for Economic Education, offers a framework for financial literacy courses in K–12 education. Essential areas include: earning income, buying goods and services, using credit, saving, financial investments, and insurance.

National Standards in K–12 Personal Finance Education
In the 2015 edition of National Standards in K-12 Personal Finance Education, the Jump$tart Coalition for Personal Financial Literacy provides guidelines and recommendations for the implementation of financial education programs in K–12 education. Key areas include: spending and saving, credit and debt, employment and income, investing, risk management and insurance, and financial decision-making.

Financial Incentives and Student Achievement: Evidence from Randomized Trials
A study by Harvard economist Roland Fryer Jr. suggests cash incentives could spur improvement in students’ grades, test scores, literacy rates, and even their behavior. Fryer conducted experiments in Dallas, Chicago, Washington, DC, and New York City, spending more than $6.3 million to “bribe” kids to improve their performance.

The Opportunity Gap
Growing amounts of research indicate children of the more affluent and less affluent are raised in starkly different ways and thus have vastly different opportunities, writes David Brooks in the New York Times. Poorer children, who likely live in single-parent households, receive far less attention and household expenditures than other children. They also have worse test scores, participate less in afterschool activities, and exhibit worse behaviors. It is time, he says, for politicians to address this problem.

Career Readiness & the Every Student Succeeds Act: Mapping Career Readiness in State ESSA Plans – Round 1–the-every-student-succeeds-act-mapping-career-readiness-in-state-essa-plans—round-1
This brief from Advance CTE and the Education Strategy Group examines career readiness in the first 17 states to create Every Student Succeeds Act plans. The researchers found while more than half the states studied plan to adopt measures of career readiness in their accountability systems, many states missed an opportunity to fully leverage ESSA to advance a statewide vision of career readiness.

Research & Commentary: Civic Education–commentary-civic-education
Heartland Institute Research Fellow Joy Pullmann examines how civics education differs between public and private K–12 education. Pullmann argues students at private and charter schools have access to stronger civics education classes and vote and volunteer in greater proportions than their public school peers.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
This paper by the Friedman Foundation for Educational Choice details how a vast body of research shows educational choice programs improve academic outcomes for students and schools, saves taxpayers money, reduces segregation in schools, and improves students’ civic values. This edition brings together a total of 100 empirical studies examining these essential questions in one comprehensive report.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, our Center for Transforming Education, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at [email protected] or 312/377-4000.