you're probably familiar with this kind of sentiment

Why are we taught financial literacy in school?

Imagine if school taught us compound interest over mitochondria being the power house of the cell

...things I still don't understand:

credit card debt isn't taught in high school.

To some extent, research supports this.

According to a 2019 study

by the National Bureau of Economic Research, over half of U.S.

adults are considered financially illiterate. And that lack of literacy

is one driving force behind the financial instability

a lot of Americans face.

We're over $1 trillion in credit card debt.

Over a quarter of us don't have any retirement savings.

And over a third of us would struggle to cover a $400 emergency expense.

So perhaps it's no surprise that 88% of adults agree

that high schools should require financial literacy courses.

But for many of us, it's not quite true

that we were never taught anything.

So maybe the question isn't why didn't we learn this stuff,

but rather why don't we remember any of it?

And how do we change that?

There's actually a pretty

straightforward way to determine

if you're financially literate.

A simple set of questions known as “The Big Three.”

One about interest rates, one about inflation

and one about risk diversification.

Let's pause here to see how you do.

If you chose these answers, congrats,

You're financially literate.

And if you didn't...

Someone who is financially illiterate

doesn't know what to

do with their money, where their money is going,

where their money currently lives and doesn't

even know the options.

Getting these answers right

requires both a knowledge of financial vocabulary,

and the ability to make mental calculations.

It takes time to understand this stuff.

You can't just like learn the basics in one or two days

and then call it good.

In other words,

financial literacy is a lot like, well, literacy literacy.

You can't just sit through one class on the alphabet

and then expect to be able to pick up War and Peace.

And you can't sit through one lesson on money management

and expect to know exactly how to handle your own finances.

The problem is, that's exactly how a lot of us

were taught about these concepts.

Since 1998, the independent

Council for Economic Education has been tracking

legislative requirements at the state level

for high school financial classes,

and their data shows that back then, at least 21

states offered some form of financial education.

And by 2011, nearly every state did.

It's hard to tell how many of us actually took

those classes, given that a lot of them weren't mandatory.

But somewhere between learning

about the Boston Tea Party for the 10th time,

and that one day spent on World War One,

Your history teacher

might have taken a crack at teaching you

about credit card debt.

But in the not so distant past, U.S.

schools actually taught financial education

pretty differently.

We'll hear more about that

after a word from this video’s sponsor.

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Now back to the video.

We don't have great records of education standards

from before the eighties, when the Department of Education was formed.

But based on old teaching materials,

it seems that up until the fifties or sixties, money

management was a fixture

in the public school curriculum, often as part of home

economics class. Alongside, you know, sewing and baking,

Students were learning how to budget for better living, use

consumer credit and save for their weddings.

There were also standalone consumer education

classes, which seemed to be less gendered.

But that started to shift thanks to the space race.

Worried that American students weren't measuring up

to students in the USSR,

in 1958, President

Eisenhower signed the National Defense Education Act,

which placed an importance on math, science

and foreign languages.

And years later, the U.S.

Department of Education published

a landmark report that partially blamed the country's decline

in educational performance on schools,

spending their time training their students for adulthood.

That same document

doubled down on Eisenhower's

math and science based educational goals,

proposing new basics for nationwide curriculums.

Since then, a steady march of legislation has made curriculums

more and more focused on standardized testing,

leaving even less room for life

skills like financial education.

But thankfully, for at least the past decade,

the pendulum appears to be swinging back.

More and more students are receiving

the kind of financial education that might stick,

spending full semesters

learning about things like household budgeting,

taxes, credit management and student loans.

In 2022, nine states required a stand alone class to graduate.

Another 14 required

that students receive personal

finance lessons within a different course.

And five more states offered it as an elective.

So access has definitely ramped up dramatically.

And as of February 2024, at least seven

more states have active bills

that would introduce mandatory classes.

And there's good reason to be optimistic

that more states will follow suit.

Many of these bills even have rare bipartisan sponsorship.

likely because financial education really works.

It's been shown to improve credit

scores, lower delinquency rates, reduce risky payday lending

and lead students to low interest college financing.

It even has a sort of trickle up effect

the students, families and even the classes teachers,

researchers are also

in the early phases of learning more about

what kinds of lessons work best and which don't really stick.

Like any planning for retirement.

Maybe because that's just a bit

too far off for high schoolers.

So it might only be a matter of time

before Americans remember as much about compound interest

as they do about cellular energy production

and as much about inflation as the dimensions of triangles.