University of Miami: Financial literacy a ‘good beginning’ for Florida students

Only about 34 percent of United States residents can answer at least four out of five basic financial literacy questions on a survey by Finra, the Financial Industry Regulatory Authority, a government-authorized organization that oversees U.S. broker-dealers.

This means that most citizens lack the knowledge to budget, get a mortgage, invest for retirement, or take out a loan. Without these skills, making sound life decisions and securing a successful financial future is bleak, experts say.

On March 22, Florida Gov. Ron DeSantis signed into law a bill that makes it mandatory that public high school students pass a financial literacy course as a requirement for graduation.

The half credit course would ensure that beginning with ninth graders who start high school in the academic year 2023-2024, the students would be taught the basics of finance such as money management, different types of bank accounts, credit scores, taxes, and managing debt.

“Financial literacy is an important life skill for a student to have,” said DeSantis in a new release about the bill. “Ensuring our students have the skills to manage their finances and perhaps one day own a business will pay dividends for our state. I am proud to sign this bill to support the future of Florida’s students and ultimately their families and communities.”

Florida joins a growing national trend of providing financial literacy to young people. The Council for Economic Education found that the number of states that require high school students to take a personal finance course increased by 24 percent from 2018 to 2020.

Mary Avalos, a research professor with the Department of Teaching and Learning at the University of Miami School of Education and Human Development, said that she believes offering the course is a “good beginning.”

According to Avalos, “the objectives look good but how it [the course] is carried out makes all the difference in students’ understanding of financial literacy.” She noted that teachers should be aware of the needs of each student to provide them with the proper tools to learn financial basics.

Experts agree that financial literacy should start at home. Students should be taught basics, such as budgeting and saving, by their parents.

But not all students come from homes where the concept of a checking or savings account is common, Avalos pointed out. “Many people do not have money to save into savings accounts,” she said.

In her work with City Pay it Forward, a nonprofit organization that seeks to educate students about financial literacy, Avalos has found that the concept should start earlier than high school.

Some teachers implement a “token economy” in their classrooms, by which students earn a certain number of tokens or teacher dollars for meeting certain goals such as finishing tasks, working collaboratively, doing homework, or exhibiting good conduct.

Teacher dollars can be redeemed for school supplies or to pay for lunchtime pizza parties provided by the teacher.

“It teaches the child to save ‘teacher dollar’ money if they want to purchase an item that costs more than what they have or to spend it. So, it incorporates learning the importance of setting goals for saving for big ticket items,” said Avalos. “It can also be a gateway to financial literacy by understanding return on investment.”

One hurdle in monitoring these programs is that it is almost impossible to know how successful they will be in the future, she affirmed. There isn’t much research that follows students longitudinally to find out how much of what is learned in a classroom setting impacts financial decisions as they get older.

Avalos also maintained that the financial literacy courses should include the concept of student loan and loan debt, including the basics of interest rates and how interest can add up and affect one’s credit profile.

Students should also be prepared to be able to make decisions on the benefits they may be offered once they are employed full-time, including a 401(k) and other such retirement accounts, Avalos stated. Preparing for a sound financial future is a crucial part of an education, she pointed out.

At the University, the Office of Undergraduate Financial Assistance offers a “Money Talks” series for students, so they learn how to make financial decisions that will help them in the future.

Some of the topics addressed include “The Value of Credit in Your Financial Future,” “Buying Your First Car,” and “Understanding Real World Finance, Financial Terminology, and Getting the Best Rates.”

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