New Jersey Bill to Require Personal Finance 101 for High School Seniors

It only takes a global financial meltdown to introduce financial education to young people. That’s comforting. A new bill is in the works that will create a three year pilot program to require a finance basics course for high school seniors in six New Jersey school districts. It would cover some basics such as writing a check, paying off credit card debt, and obtaining a mortgage. 

Personally, I’m glad this is beginning to take place, even if it’s just one community or one state at a time. Unfortunately, this is something that should be taught at home and isn’t something that should necessarily be part of a public education, but let’s face the facts. It isn’t being taught at home, so this is the next best option. I guess you could say the same thing regarding sex education. A lot of kids won’t get the proper education at home, so the burden falls on many schools, right or wrong.

Overcrowded Curriculum

Critics point to issues around the already crowded curriculum, and it is true that many public schools are already faced with trying to work with a shortfall of time, resources, and money. If you want to introduce a new course, it will likely have to replace something else, or in some cases, may even require a longer school day, which in turn costs even more money. Proponents of the changes say that the personal finance concepts can be incorporated into existing business or economics courses.

Requiring yet another area of knowledge to be included in the curriculum isn’t a perfect solution, but what are the alternatives? It’s fairly obvious that a good deal of the financial problems we’re facing right now stems from a lack of basic financial knowledge. There is plenty of blame to go around, but when you have a whole generation of people who have no idea how a mortgage works, or the ramifications of compounding interest on credit card debt, or the importance of saving even a little money, it’s no wonder people often find themselves in a bind.

So, what’s more important? Would high school graduates be better off knowing that Hernando de Soto was a Spanish explorer that discovered the Mississippi River, or knowing that you can ruin your life with just a small piece of plastic? 

Too Little, Too Late?

I’d almost have to argue that this type of course is too late to the game if it’s targeted to high school seniors. Good spending habits are learned over the course of a few years, and the sooner the better. And let’s not forget the bad case of seniorits that goes around and has many seniors day dreaming about girls, college, and graduation parties. 

I’d obviously like to see more parents take a hands-on approach to finance and lead by example while passing down good money habits, but we need to walk before we can run. If parents didn’t have this kind of education and can’t manage their own money, it’s obvious they won’t have much to pass on to their children. So, maybe by starting to introduce some basic financial skills at the high school level, we can at least begin to churn out some financially savvy new parents.

What do you think? Is the introduction of financial education into schools a good idea? Should it be done at an earlier age? Or should we keep the status quo?

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

31 comments
madison7895
madison7895

I am a 56 year old that is FINALLY learning from major past mistakes that should not of ever happened if I would have learned about the ramifications of poor financial choices. I SHOULD of learned early in life how to manage money from my parents, but as Jeremy stated, most of us are not. This deeply important lesson will continue to impact our economic future. So I am a HUGE proponent of requiring courses at the high school level. Just a thought, what if our teens had some kind of knowledge of the realities of financial peace years ago, say before the economy crashed? Would we be in the mess that we are in now! I think NOT! Young adults now are inundated with free credit cards offers almost daily! How scary is that? If they are not taught by someone of the ramifications of poor financial decisions early, the credit card industry would not own us!!!!!!!! Money should be controlled by us, not the other way around!!! Just take a minute to look up the total amount owed by us to the credit card industry and pause! Mind boggling to say the least. To wrap up, demand education at the high school level on fiances that will dramatically impact our future!!!!! It is ignorant not to have these classes in our curriculum!!!!! I need to find out how to promote this in NC!

Credit Repair Report
Credit Repair Report

Financial responsiblity should be taught at an early age in school and be included in the curriculum through graduation.

Current account
Current account

I think it now the time to think differently. I wish I had a class in High School. If we do not learn this skill from school, where would the next generation learn it? Their parents have failed to learn it, look to see how much consumer debt is in this nation.

Sarah Daniel
Sarah Daniel

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Sarah Daniel
Sarah Daniel

ABSOLUTELY! I find it quite amazing that my colleagues and I were just talking about the need for this just TODAY! We are a nation of uneducated consumers that allow ourselves to be victims to this credit & economic crisis. We MUST educate our kids on what credit is...how to even read a credit report...how our credit score is calculated...how to maintain good credit...how to settle their own debt...money management...federal laws that protect them and soooooooo much more!

There is a company called Imagine International with the ONLY software out there that educates and COMPLETELY automates the credit improvement process. I am 43 years old and have learned more about my rights as a consumer, my credit, the laws that protect me as well as improving my credit at the same time. This software is AWESOME!!! And the only thing that has ever worked. EVERY HIGH SCHOOL & COLLEGE NEEDS IT! This product does everything that an attorney or a credit repair company would do. I mean, it generates ALL the correspondence to send to the credit bureaus (and it quotes federal law)! You gotta get it! IT'S ONLY $20 A MONTH!!!!!!!!!!! FOR 2 USERS!!!
How can we get it in the schools? go to www.imagineinternation.biz...Oh by the way, they have another software that teaches business owners how to establish "business" credit...financing for their business without using their social security #! WOW!

Ruthann
Ruthann

Dave Ramsey has specific cirriculumn designed for young people from early age thru teenagers. All the school districts would have to do is obtain the books and excercises from his website www.daveramsey.com and incorporate it into the age appropriate clasess. Yes, Senior Year is too late!

Hank
Hank

One of the negative points of this great idea is that you are going to have people who are not qualified to teach personal finance instructing our young, impressionable youth. In Georgia, for example, government teachers (with degrees in political science and/or history...not economics) teach economic principles for only one quarter to high school seniors. Many of those teachers do not feel comfortable or even totally understand the concepts of supply and demand, scarcity, etc. themselves when they are teaching it to our kids.

Ken
Ken

There is a program in my area (TN) called Reality Check. iT is sponsored by Junior Achievement. Each 8th grader randomly draws a salary/job. He/she then goes from one booth to another with his monthly pay and makes choices on what kind of apartment, house, goceries, utilities, etc. I've heard great reviews of this program. We need personal finance touched on in middle school. We might make it a part of Freshman math somehow. I don't know exactly how it would work. It is definitely needed.

Christine
Christine

I think this is an excellent idea, but I would require it for freshmen and sophomores. Include understanding a lease, buying car insurance, purchasing a car, doing your own 1040ez taxes, getting a credit card, balancing a checkbook, preparing a budget, shopping tips. I also think a cooking class should be a requirement. "Total Money Makeover" should be required reading. I took a personal finance class in high school and again in college. I gruaduated college debt free and didn't get a credit card until I would be traveling overseas and needed it to guarantee the hotel. I didn't pay any interest for the first 8 years I had the credit card either. I lived on my own after college and amassed a pretty good amount of money in savings before I became disabled and fell into credit card hell.

Ian
Ian

While I think it has a long way to go, I am really excitied that finally someone is starting to realize that money management needs to be taught at an early age.

Sony
Sony

Excellent insight. Healthy spending habits should begin earlier. Possibly the beginning of high school.

Jen
Jen

I think this is a good start, but you know what, it's fairly easy to introduce basic financial concepts early on. When I was in third grade, if we did well on a homework assignment or did something good, our teacher stamped the image of coin on the homework assignment or a piece of paper. We'd cut it out and save it. Once or twice a year, we'd bring in items we didn't want any more and have a class yard sale with our fake money. It taught us to add and subtract, rewarded us for hard work, and gave us an early taste of making decisions about what to buy with X amount of "moeny."

I also remember learning how to write a check in class - I don't remember which grade, but it was elementary school.

Financial concepts can so easily be incorporated into math classes.

tom
tom

Its about time they woke up but they better speed up the process because sure the kids need the education but it is the adults that need it even more.

stephen
stephen

I think financial literacy should be started when they are freshman. It is about the age when students are thinking of getting jobs, so they should know how to fill out proper forms, sign a check, and even manage their money. I went to HS in New Jersey and we had a lot of required academic classes that offered a very resticted school day. I wished we had an extra period on the day, to have an additional class, because by the time I fit in the required state coursework I was left little time for electives and practical classes. My high school had a very strong business program, but I know not everyone took the classes and I'm sure the same could be said for similar school across the state and country. Financial literacy is a great idea. Perhaps instaed of requring 4 yrs of gym in NJ, they can replace one year with financial literacy. I understand the obesity epidemic, but 40 minutes of activity that you don't have to participate in, isn't going to solve the problem, and in high school students are at the age to make their our decisions regarding their habits. Just a thought. Thanks.

Jeremy
Jeremy

Diane, thanks for pointing out the Michigan bill. As a Michigan resident, I'm surprised I haven't heard of this. Of course, when I see how our state is being run, maybe that shouldn't be a surprise ;) But that is great news, provided school districts actually begin to implement it!

Diane Knudson
Diane Knudson

This is good news about New Jersey. In Michigan, on December 2, 2008, Senate Bill 834 passed with 100% support from our Legislators! This bill will allow for school districts to offer a one semester personal finance class to fulfill a math credit. Local districts can decide who will teach the course. Hopefully other states will do the same!

C in DC
C in DC

There was a time when our schools taught to produce good citizens, rather than college prep. Classes like civics and home economics were the norm. Maybe it's time to revisit our curriculums. I think classes like this need to become a standard item.

the weakonomist
the weakonomist

It is sad that it's taught to high school seniors, but it's also better than nothing. If the program makes it into the schools then they will see it shoud be pushed down a bit to younger kids. I've lobbied my state for a few years now to introduce programs for personal finance. So far nada. Hopefully other states will follow suit. Kudos to NJ for setting an example!

richerandslimmer.com
richerandslimmer.com

I think it is a great idea to start teaching to these high school students. These courses may not have been any help in this financial crisis, but they have the potential of preventing or reducing the impact of future ones when these kids grow up.

thomas
thomas

Great piece of legislation. Next should be mandatory spanish. Those two classes alone will help you survive the next generation of America.

Kristy @ Master Your Card
Kristy @ Master Your Card

It's about time! I've been saying for years that Banking 101 needs to be a class in high school, though I think it needs to start freshmen year. Working in banking, I have kids come to open their first account and have no idea what a credit union is, they have no idea what the difference between a checking and a savings account is, and they certainly have no idea how to fill out a withdrawal slip. It's really scary what little education kids these days are getting in areas of personal finance.

I'm glad that New Jersey is taking this step, but this is exactly why I'm implementing a "Banking 101" over at Master Your Card. While most of our readers are financially savvy, there will be some how-to videos to share with kids, teens, and anyone just starting out in finance. I just want to do my part to try and teach the younger generation about finances.

Asset Reconstruction
Asset Reconstruction

Something is better than nothing.Its good to start some finance related course curriculum to students. In this time its very necessary that our future youngsters have basic skill of finance and they move our economy in strong situation & they do no face such type of recession, financial crisis again.

Jason from MoneyTheory
Jason from MoneyTheory

I am so glad to see a school district that is planning to do this! There are so many courses that are taught in high school that are, in my opinion, much less important than personal finance. And I agree - I think a lot of this should be taught at home, but like you were saying, I would guess that in most homes it isn't, so if the school isn't going to do it either, then many people unfortunately end up learning the hard way.

Brian
Brian

About time. I wish i had a class in High School. If we do not learn this skill from school, where would the next generation learn it? Their parents have failed to learn it, look to see how much consumer debt is in this nation.

Jeremy
Jeremy

I'm not sure exactly what the course would consist of, but aside from some of the more academic exercises in investing, saving, debt, etc, I think there should be some sort of real world reality check.

I know as a teenager, I had no idea what most things in the real world cost. How much does it cost to rent an apartment? What's a typical mortgage payment like? How much of your paycheck goes towards taxes? What does a person spend a month on groceries? These are things that unless your parents explicitly share with you, you'll have no idea until you're faced with it on your own.

Give someone a scenario where they have a job after college making $40,000 a year. Then, break everything down to show that even a modest lifestyle on that income is going to be harder than they expect.

Making that kind of money will get you a gross paycheck every two weeks of $1,500. After taxes and insurance premiums, they can expect what, about a $1,100 paycheck? So, they have around $2,200/month to work with. Subtract $1,000 for rent/mortgage. Subtract another $300 for a new car payment. Another $100 for car insurance. Probably another $300 for all of your utilities, maybe $100 for gas to fill your car, and another couple hundred for groceries. Tack on a few nights out a month for entertainment, and look at that. You're broke and living paycheck to paycheck. If you have student loans or credit card debt on top of all that, it's pretty easy to see you're probably not living the kind of life you thought you would be after landing your first job after college.

I think it would come as quite a surprise to the teenagers who don't have a clear understanding of what things actually cost. So if you could put things into perspective to illustrate how fast the basic necessities of life add up and can leave you with little or no spare money, you'd change a lot of expectations and curb some of the rampant spending that usually leads to the big mistakes made early on.

D.A. Slinkard
D.A. Slinkard

I think this is a tremendous step in the right direction! As for when to start the program, at this point even if it is starting w/seniors, guess what...that's more than what can be said prior to.

The ridiculous thing is the opponents who speak out in regards to this, though this could easily be institutionalized into a school curriculum with any kind of tweaking. An example, I know when I was in school, it was required to have an "office business" class, which consisted of typing and using the Internet, well now kids know their way around the Internet as early as the 4th grade.

Anyway, great site here, I have added this to my blogroll...

Sincerely,

D.A.
gazelleintensity.wordpress.com

Craig
Craig

This is smart, I'm surprised districts haven't been doing this all along. I am a recent college grad and would have loved a course like this in high school. I feel like I am playing catch up on basic life practices that make me feel silly when I ask simple questions.

Grant Baldwin
Grant Baldwin

Good info...

I teach a workshop for students on personal finance, and I'm stoked to hear more and more schools are making it mandatory. I'm happy they are starting with the seniors, but I'd like to see it happen even at a freshmen level if not middle school.

Thanks for point this out to us!

The Happy Rock
The Happy Rock

Thanks for the info Jeremy.

I also agree that by senior time a lot of your financial patterns will already be in place. Then you have to undo your habits and then learn.

Mike
Mike

I think it's a great idea, but I'd start with high school freshmen. Waiting until they're seniors seems too late. I'm not sure about NJ employment laws, but many kids will already have worked at part-time jobs for a couple years by then. However, I'd avoid teaching it to anyone younger. Before high school, money isn't "real" to most kids.

Angie
Angie

I would aim in towards Juniors instead of seniors, and have a large portion based on college loans and cost of colleges. Isn't that more relevant to high schoolers than obtaining a mortgage?