(State of financial education: Many money problems Americans face could have been avoided if financial literacy was taught earlier in school. That knowledge helps create a foundation for students to build strong money habits early and avoid many mistakes that lead to a lifelong of money struggles. This story is part of a series looking at the current financial education landscape in this country.)
Kinsha Sidibe is a freshman in high school and she's already learning about personal finance.
It's not because the state she lives in, Pennsylvania, mandates the education. It's thanks to a program run by a nonprofit, Niche Clinic, through her high school, Mastery Charter School's Hardy Williams High in Philadelphia.
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"Before this, I really didn't have an understanding about personal wealth," said Sidibe, who is 14 years old.
"It made me understand what I should do in order to increase my net worth and manage my own finances if I don't want to go into debt," she said.
Research shows that a personal finance education helps students avoid payday loans, have better credit outcomes and reduce private student loan balances and credit card debt, among other things.
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Just 21 states require students to take personal finance coursework to graduate high school, with only a handful mandating stand-alone classes, according to the Council for Economic Education.
Yet the access to that education remains unequal and the impact is clear. In 2019, the median wealth of Black households in the U.S. was $24,100, compared with $189,100 for white households.
As for the programs, less than 12% of students are required to take a stand-alone personal finance course to graduate high school, outside of the six states mandate it, research by Next Gen Personal Finance, a nonprofit focused on providing financial education to middle and high school students, found.
When it comes to Black and Brown students, it drops to 7.4%. Of low-income students, 7.8% are required to take the class.
That means not only will the wealth gap between the 1% and the 99% increase, the racial wealth gap will also get wider, warns Yanely Espinal, director of educational outreach at Next Gen.
"The financing decisions and behaviors are not going to improve, which is going to create another generation riddled with debt," she said.
To be sure, taking a personal finance class will help equalize understanding for all students.
Of course, financial literacy is not the only contributing factor to the racial wealth gap, but it is one component that is part of the solution, she noted.
Already, Black adults are behind whites when it comes to financial literacy, the 2021 TIAA Institute-GFLEC Personal Finance Index found.
U.S. adults answered only 50% of the TIAA index's correctly, on average. White adults got 55% correct, while Blacks answered 37% of the questions correctly. Hispanics also lagged behind, scoring 41%.
With a lack of state mandated personal finance classes around the country, some schools have stepped in to fill the gap.
In Prince George's Public Schools in Maryland, it was actually the students who advocated and called for requiring a personal finance class in the district's high schools last year.
It is one of the nation's largest school districts and among the most diverse, with 55% of its students Black and another 36% Hispanic or Latino.
The course is now required to graduate high school, starting with the class of 2024.
"We want them to walk away with knowledge of how to earn money, how to make money work for them and the know-how to stay out of debt or manage debt they may incur," said Prince George's Public Schools CEO Monica Goldson.
Among the students advocating for the mandate and testifying in front of the board was Zoë McCall.
While she had some money conversations at home, she wanted to learn more. She also saw the challenge faced by many of her peers, who didn't talk about money at all with their parents.
"Not all of us know how credit works. Not all of us know how to get a loan and stuff like that," said McCall, now a 15-year-old sophomore at Academy of Health Sciences in Largo, Maryland.
"We're going to need to know how to take out a loan to pay for college, we're going to need to know how to pay back student debt, we're going to need to know the basics of money, and not a lot of us do," McCall added.
While it's important for everyone to have financial knowledge, it's even more critical for those who are economically disadvantaged and likely know less about these issues, Goldson said.
"It is our hope that this financial education will empower students to make their money work for them and ultimately will be a catalyst toward upward mobility," she said.
Due to the lack of in-school finance classes, nonprofits have long been playing a role in trying to bring the education to underserved communities.
At the National Urban League, financial education is part of the Project Ready initiative, which supports youth outside of the classroom.
"Some of these kids are precariously positioned economically," said Cy Richardson, senior vice president of programs at the National Urban League.
Some of the barriers to mandating such education in public schools is the inequity in school funding, as well as budgetary and governance challenges, he said. Teachers also have to have the proper skills and training.
"It can't just be preparing people to distinguish between credit cards and things that consumers are confronted with," Richardson said. "It is daily existence; the little decision-making wins that relate to financial capability."
While some may also be concerned about curriculum costs, it is free on any number of nonprofit websites, said Next Gen's Espinal.
What's left is finding a teacher who has a passion for the material and training them, which can also be done without cost through institutions like Next Gen, she noted. More than 6,000 teachers have completed 130,000 hours of professional development with Next Gen since early March of 2020.
"The research shows the impact of this work has led to significant increases in their confidence, which we know translates into more effective teaching," said Next Gen's co-founder Tim Ranzetta.
Once the students start learning the material, it not only benefits them, but also their families.
"The students absolutely take this home," Espinal said. "You see parents asking about Roth IRA accounts and whether they should open them.
"It has a ripple effect on the entire community, students, teachers and parents."
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