As we send our students into the real world, the expectation is that they will not only survive but also thrive amid chaos and unknowns. But are we truly setting our students up for success, in all aspects of their lives? One way we can be confident that we are doing this is to teach them practical, relevant life lessons, including financial education. To be well-equipped, students must understand how to spend less than they earn and how to budget. They need to know about interest, saving, investing, credit and debt, taxes, and many more aspects of money management.
They also need to be able to create products, ideas, and jobs that artificial intelligence can’t replace. Creating an entrepreneurial mindset has other lasting effects. Entrepreneurs help communities by providing jobs, conducting business locally, investing in community projects, and giving back. They can boost economic growth and have an impact on social change as well.
So when should people learn these lifelong skills of financial literacy and entrepreneurship? Who should be teaching them and in what environment? The logical place to receive an education of true consequence is in school. But what does that look like, and how can independent schools prepare students for tomorrow?
Where We Are Today
Just one-third of the world’s population is financially literate, or has the skills and knowledge to make informed decisions with their financial resources, according to the 2014 S&P Global FinLit Survey, which measured understanding of risk diversification, inflation, numeracy, and interest compounding. In 2015, The National Financial Capability Study by FINRA Investor Education Foundation found that nearly two-thirds of all Americans couldn’t pass a basic financial literacy test, which included questions about financial risk and calculating interest.The lack of financial literacy in the United States, and thus the lack of financial responsibility, has been linked to a rise in the number of government entitlement spending, which in 2010 grew to almost 100 times higher than it was in 1960, according to U.S. News & World Report. Entitlements have increased nearly 10 percent per year for the past 50 years, and many Americans are born into entitlements. Medicaid covers more than one-third of births in America, according to a study published in Women’s Health Issues.
The U.S. ranks seventh in the most recent Programme for International Student Assessment (PISA) data, a study by the Organisation for Economic Co-operation and Development, which found that countries that have either started introducing financial topics in the curriculum or have developed financial education pilot programs in schools performed above average in financial literacy. (China, Belgium, Canada, Russia, and the Netherlands ranked highest.) When students are given an opportunity to learn about finances and personal responsibility on a consistent basis, the study found, the outcome is beneficial.
U.S. institutions are starting to take steps in the right direction, as many states and districts are beginning to include financial literacy and economic standards into their social studies curriculum or are creating a financial-literacy curriculum. According to the 2017 National Report Card on State Efforts to Improve Financial Literacy in High Schools from Champlain College’s Center for Financial Literacy, five states received an A for their efforts in financial literacy, including Alabama, Missouri, Tennessee, Utah, and Virginia. They require high school students to take at least a half-year personal finance course as a graduation requirement. Another 19 states require that students receive personal finance instruction to graduate from high school, but not as much time is devoted to it. According to the National Conference of State Legislatures, 29 states and Puerto Rico passed financial-literacy bills in 2018, and 17 states enacted laws or adopted resolutions.
Still, teachers in both public and independent schools admit that these are the last standards that are taught for a variety of reasons. First, the majority of time is spent on standards that are specifically targeted on state tests. According to a 2016 PwC report, “Bridging the Financial Literacy Gap: Empowering Teachers to Support the Next Generation,” another factor is the lack of resources, including curriculum, available to teachers to help support the lessons. And the report indicates that teachers don’t feel comfortable teaching financial literacy because they don’t have the knowledge or expertise.
What Can Be
Independent schools have more freedom in their curriculum to teach financial-literacy skills, but most rely on what is referred to as “parachute” or drop-in programs, such as Consumer Action’s MoneyWi$e, FDIC’s Money Smart for Young People, and SIFMA Foundation’s The Stock Market Game, among others. Weeklong or quarter-long courses in financial education aim to help students learn the basics. But one course in economics or personal finance doesn’t allow time for habits to form.Many independent schools have identified the need for financial education in the school setting, but what’s missing is the curriculum to teach it.
In 2015, Kristina Scala, head of school at Aspen Academy (CO), a pre-K through grade 8 school, identified the need for a wholly sequenced curriculum on financial literacy. It would need to focus on economics, business and organizational leadership, personal financial literacy, and innovation and entrepreneurship. Students as young as kindergartners will need to learn these concepts at an appropriate level. So Aspen Academy teachers researched, developed, wrote, piloted, and revised the curriculum over two years, and other staff members observed lessons and gave feedback on student engagement and teachers’ content knowledge.
The result was an entrepreneurial institute for innovative thinking and 21st-century skills, including a focus on gaining personal responsibility for finances. The Aspen Entrepreneurial Institute (AEI) isn’t just a class; it is the foundation of the values and a belief system that all students must be prepared for a future that is unpredictable.
At every grade level, students and teachers devote 30 minutes twice a week (Money Monday and Finance Friday) to their AEI work, learning the financial-literacy curriculum. In any given AEI class, kindergartners are counting money, contributing to a classroom economy, and creating a class business. By the time students graduate from eighth grade, they not only have learned about the stock market, budgeting, taxes, gross and net profits, credit, and interest, but they also have written business plans, started their own businesses, and pitched their ideas. They’re able to call on skills they’ve learned to manage their life and build their own opportunities.
Teachers at Aspen Academy are also taking steps to learn more about their own personal finances through schoolwide professional development. Throughout the year, experts in a variety of financial fields, including financial advisers, stock market investors, and entrepreneurs, visit the school to discuss concepts at a deeper level. Similar to building their own expertise, teachers regularly learn about budgeting, investments, and the stock market, so they can feel confident in the classroom.
Financial literacy is a subject that cannot be taught through memorization and test-taking. Real life doesn’t work that way. Real life includes real decisions: I have enough money to pay rent or to buy food. Which is it? We can teach kids all about investing money, but if they can’t afford food, their priorities and buy-in will be faulty. To create student buy-in, students need and want real-world experience that will be relevant to life outside of the classroom. Teachers often hear, “When are we ever going to use this?” For once, they’ll have an answer.
Conversation Starters
As schools begin to dedicate more time to building a financial-literacy curriculum, here are some discussion questions to consider.- What is the overall objective for incorporating a curriculum such as this into your school?
- What impact will the curriculum have on the students’ future?
- How much time are you able to dedicate to this topic each week? Each month? Throughout the year?
- What are you willing to give up to implement this into your school day?
- What type of curriculum works best for your students to gain meaningful insight and authentic lessons?
- Who is best suited to teach a curriculum like this? What type of teacher training, professional development, and teacher resources will be available? Who can help coach your teachers?
- Will this add additional planning and prep to teachers’ schedules?
- How will you get everyone’s buy-in?