Dealing with personal finances – credit card and utility bill payments, rent, insurance and paying for basic needs – can be overwhelming to young people when they go out on their own. The idea of balancing a checkbook, or more likely keeping tabs on the Venmo or electronic banking statement, can be daunting to someone raised on apps that make it easy to transfer electronic payments and rack up debt with a tap on a cellphone keypad.
Massachusetts is one of a dozen states that don’t have a state-level requirement to teach or offer personal financial literary training to students before they graduate. That’s not to say no such training takes place, but at this point it’s done through the efforts of regional banks and with encouragement from and grants through the state treasurer’s Office of Economic Empowerment.
The Institution for Savings teamed up with a half dozen other Bay State banks earlier this year to host a virtual “Credit for Life Fair” through creditforlife.org. The financial literacy program was set up as a way to promote this education statewide because the pandemic made in-person fairs for high schools students impractical.
This online fair – which has been held in many Bay State schools for more than a decade – puts high school students in the roles of 25-year-olds who must spend their “paychecks” on everything they need to live. It’s only a half-day event but it’s the kind of role-playing that has proven popular with students by giving them a practical grasp of how to make smart decisions with a limited income. On Monday, state Treasurer Deborah Goldberg testified before the Legislature’s Joint Committee on Education in support of a bill her office filed – HB 42 – that would require financial education in schools by establishing a trust fund to pay for course materials and teaching resources as needed.
In a statement she released before testifying, Goldberg said the Department of Elementary and Secondary Education allows financial education to be offered but there are schools across the state that don’t currently give students that opportunity.
“The research is clear,” Goldberg said. “Students who receive this education have been more likely to save, budget, invest and increase their credit scores.”
And, in light of the economic uncertainty the pandemic has imposed over the last year and a half, “there is no better time to ensure all Massachusetts students learn foundational financial skills so they can be prepared for a life that often has uncertainty,” she said.
To those who might chafe at making financial literacy education programs mandatory, when so many other subjects compete for time in the classroom, Goldberg said the legislation would ensure quality and consistency with what is taught.
“This is yet another equity issue,” Goldberg said. “Low-income people are more vulnerable to financial downturns than those with high incomes and have less opportunity to attain these necessary tools.”
It’s clear that Goldberg and other state officials see real value in giving young people the skills to manage their money when they’re on their own. In early 2019, Gov. Charlie Baker signed legislation allowing state education officials to set standards for financial literacy that schools could work into subjects such as math, business and social science classes.
But Goldberg’s proposed bill would both establish a source of funding and set consistent standards for what is taught when it comes to financial literacy.
This proposal looks like valuable, commonsense legislation for skills that every student can use as they negotiate the always uncertain path of adulthood.