The Lack of Financial Education in the Modern School System

Author :
Rohan Malyala

With some individuals who have completed high levels of schooling barely being able to maintain financial stability and individuals who have not even finished high school succeeding much further than the average, it leads
to the question: To what extent does basic school education affect students’ financial growth and success along with
their interpretation of finance? Experts believe, finance and money management, is a critical skill, “Personal finance
is not taught systematically in high schools” (Danes). According to researchers, Sharon M. Danes, Catherine
Huddleston-Casas, and Laurie Boyce, in their Financial Planning Curriculum for Teens: Impact Evaluation; lack of
finance education is a significant issue and teenagers are not getting the required knowledge and exposure related to
money management that they need in order to succeed in their future. This matters to the audience because schools
are meant to help students get ready for the real world. They are trained to face problems and issues that arise when
they become adults. But as we see increasingly in present times, people are not able to reach their financial goals
irrespective of how much they earn. They cannot manage their finances, because they are not taught how to manage
money, be financially literate, and achieve their targeted monetary goals.
Understanding and being able to interpret financial knowledge is extremely important for an individual in
the modern world. Learning about this crucial information as a teenager and adolescent is important as this is an
individual’s prime learning time. According to executive directors of research Anna Paulson, Shawn Cole, and
Gauri Kartini Shastry at the Federal Reserve Bank of Chicago, “Financial skills related to financial literacy are
extremely important and help develop cognitive abilities linked to the quality of decision-making and financial
success in individuals” (Cole). Not only are these skills proven to help with financial literacy and financial success
in the future but understanding these topics at an early age can propel individuals to further understand financial
management and garner qualities that will allow them to succeed in life. Learning these skills, in turn, will allow
them to gain financial knowledge in order to reach their goals. According to field scientist, Lewis Mandell, “Low
baseline results in 1997 have further deteriorated with scores on the 31-question, multiple-choice exam now
hovering just over 50 %” (Mandell). This goes about to show why students fail to understand financial management
and thus fall short of real success. The education system presently is teaching less about these essential topics and
concepts. Allowing students to get this knowledge will help them avoid poor scores and learn crucial life skills for
their future. These skills are useful and extremely important and significant to prosper and succeed and young adults
need to understand this. Though some individuals state that they are too young and immature to understand financial

concepts, the whole point of education is to set them up for the future. Education is now about facts that become
insignificant within some years versus a lifelong skills that can help them with life and finance management. Utility
of the education is a strong demonstration of which subject is more valuable and helpful. Overall, financial skills
will significantly build skill sets that are significant to an individual’s financial success and literacy.
Students in our current education system show little to no signs of high understanding of finance and
money management when exiting school. Students show a low level of ability to make age-appropriate financial
decisions in their own self-interests. According to researcher and teacher William Walstad,, “all [studies] conclude
that teens lack knowledge about personal finance” (Walstad). Many individuals in the younger generation lack the
knowledge about efficiently managing their money. Managing a budget is an important life skill and early-stage
introduction of the required skills and yet according to this detailed study, students are not being exposed to this
knowledge when they should. This phenomenon is impeding on students’ ability to manage their money effectively.
According to Elizabeth Johnson, student analyst, the “youth in the United States are facing an increasingly complex
and perilous financial world.” and are not prepared as they are “economically disadvantaged” (Johnson). An
overwhelming majority of teens admitted that they do not even know anything about personal finance. Most of these
kids are learning purely off of what is taught in the standard education system and since finance is not effectively
taught, students fall into a perpetual cycle of misinformation. Though lots of evidence supports the fact that students
and individuals are not being exposed to enough of this knowledge that would benefit their life, individuals like
Sheela Devi D. Sundarasen, the head of the Journal of Business Studies Quarterly, states that “Money management
has gained significant importance as being a vital part of financial stability and development” (Sundara Devi).
Though this is true that personal accounting has gained more importance and more awareness in recent years, there
is no effective solution that allows students to be more prepared and ready and no action has been taken in order to
resolve this and ensure students get the knowledge they need to be financially literate. Individuals like Martha Henn
McCormick, associate professor of economics from Wesley College, state that action is being taken. McCormick
states that “high school classes in personal finance and money management are in schools” (McCormick). However,
in hindsight, it can be argued that these have not proven to be effective in raising levels of financial literacy and a
different method is necessary. Overall, students and graduates of the standard education system are not being
exposed to and not being taught significant life skills like how to be financially literate and independent.

Proper strategies for educating children about personal finance have not yet emerged. It is stated that there
must be a way and an opportunity to talk about finances and teach teens so they learn about managing money.
Education is made in order to help students achieve success and financial goals so the fact that these topics have not
properly arrived in the education system yet schools have not effectively been able to accomplish this. Margaret
Sherradan, a research professor in financial education, clearly stated that “Despite growing interest in youth
financial literacy, we have not seen comparable efforts to financial policies and services, especially amongst the
disadvantaged youth” (HeinOnline). Sheridan clearly identifies that there is no action taken by schools and no actual
education system was successfully put into place to bring students this knowledge that they require to succeed.
Though awareness was brought to help people understand the need to help bring financial literacy to the younger
generation, nothing was put into place. Donncha Marron, a finance professor at Harvard, also stated that “little is
known about the effectiveness of this education or the curricula used within these educational efforts. The purpose
of this study is to assess the impact of a high school financial planning curriculum on the financial knowledge,
behavior, and self-efficacy of teens” (Donncha Marron). Marron instilled that the people are truly unaware of the
effectiveness of teaching this knowledge to the generation in school right now at a young age and that is why such
action is not being taken to immediately bring this to schools. There are many teens working part-time jobs,
however, they are not keeping track effectively. If their budgeting skills are even just mediocre, they will know
balancing a budget and make it as a natural next step in the daily life process, because they’ve got to keep track of
the money coming in and going out throughout their lives. If the education institutes guide students, then they will
be confident and knowledgeable when it comes to managing personal wealth all their lives which, in turn, leads
them to gain more monetary success. Based on research, It should be taught reducing money spending levels and
developing a viable source of saving and investing financially. Currently, there are no proper tools or real-time
exposure to learning in a systematic manner. Overall, action needs to be taken in order to bring children this
knowledge that will significantly help them understand and implement financial knowledge and literacy.
In order to resolve this issue that there needs to be more education related to finance and money
management in order to help teenagers and young adults gain more understanding and can set themselves up for
success, there needs to be a viable, unique, and succeeding solution. One solution that has been previously proposed
and tried to be implemented was making this a club in school and trying to get kids to join. The only problem with it
is that students do not know it is valuable to them and will not join. It is like an English class. Teenagers, given the

option, would not pick to attend the class, however, the skills learned in the class are essentially to set them up for
success. Another alternative was to include it as an elective as a normal high school class in personal finance and
money management. This, however, has the same issue. Students would rather pick a class that is less applicable and
more appealing as they are unaware of the immense opportunity for growth and learning through these classes.
Based on the result from trying to implicate these two leisure ways of introducing finance to children that the only
plausible and reasonable way to ensure teenagers get this knowledge is to make certain requirements away and
promote and encourage students to take mandatory money management, business, and finance classes in high school
because based on the research, these are the most effective and best way to help students to optimize their financial
success as young adults and achieve success. In these classes, they would hire successful people who have to
achieve success financially to teach the students in real-time and explain how they did it in order for students to
understand and get inspired to do it themselves. Though all the logistics are not calculated, this could be a unique
opportunity for students and the education system to get outside of the comfort zone and try something new to help
take the next step in education. Some limitations through this method would be that there has been lots of
controversy and students in grade school might not be entirely interested in taking these essential classes and it
would be difficult to bring these types of classes with unique curriculums to schools across all districts. The best
resolution would be to bring classes to schools to everyone so people grow up understanding these fundamentals and
are more prepared when exiting high school.
It is imperative that a solution to this issue is identified in order for teenagers and young adults are more
financially literate and prepared by schools to succeed in the future. How do you think your life would have changed
if you were taught about finances and money management when you were younger?

Work Cited

Cole, Shawn, and Anna Paulson and. “Shawn Cole.” Journal of Human Resources, 1 Aug. 2016,

D. SundaraDevi sen, Sheela. “Impact of Financial Literacy, Financial Socialization Agents, and Parental Norms on Money

Management.”, 2016,


Donncha Marron“‘Informed, Educated and More Confident’: Financial Capability and the
Problematization of Personal Finance Consumption.” Taylor & Francis,
Johnson Elizabeth HeinOnline,
M. Danes, Sharon. “Financial Planning Curriculum For Teens: Impact Evaluation.” Citeseerx,
Mandell, Lewis. “Financial Literacy of High School Students.” SpringerLink, Springer, New York, NY, 1 Jan. 2012,

McCormick, Martha Henn. “The Effectiveness of Youth Financial Education: A Review of the Literature.” SSRN, 27 Feb. 2015,

William Walstad “Perspectives on Evaluation in Financial Education: Landscape, Issues, and Studies.” Taylor & Francis,