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Financial Literacy Month: Preparing Students for Financial Independence

April is National Financial Literacy Month (also known as Financial Capability Month), which emphasizes the importance of financial literacy education and preparing a secure financial future. This month of awareness is dedicated to empowering Americans of all ages to make informed decisions and establish healthy financial habits, which can lead to enhanced financial wellbeing and stability.

There has been an increase in legislation focused on K-12 personal finance education over the past four years, likely in response to the Covid-19 pandemic, which emphasized the financial vulnerabilities of many Americans. However, states and districts still have a long way to go in order to ensure students are receiving a comprehensive personal finance education that prepares them for the many financial decisions they will have to make as they enter adulthood.

While 48 U.S. states mention personal finance somewhere in their standards, far fewer actually require students to take a dedicated course or coursework in the subject. As of March 2024, only 25 U.S. states require their students to take a standalone, one-semester (0.5 credit) personal finance course before they graduate. Effective financial education improves financial literacy and is critical to students who––for a variety of reasons––cannot get sufficient financial guidance at home. By legislating to require personal finance education in K-12 schools, states can more equitably improve financial literacy among their students.

Although personal finance education remains limited, Americans support the expansion of financial literacy programs. In a 2022 poll by the National Endowment for Financial Education (NEFE), 88 percent of U.S. adult participants said they think their state should require a dedicated course focused on personal finance education in order for students to graduate high school. Furthermore, eight in ten of the poll participants said they wish they were required to take a personal finance education course in high school.

Financial literacy is a crucial part of a holistic education, especially for high school students who likely will be financially independent within the next five years. Young people are entering a complex economic landscape and must learn how to manage their money in order to promote a positive financial future for themselves.

At VHS Learning, high school students in any state can take our high-quality Personal Finance course that introduces them to how money works and how to manage their own personal finances effectively. Because a financial education is valuable to every student, we offer this course in a variety of approaches, including a standard course, credit recovery, and as a flexible self-paced course.

To prepare students for financial independence, here are four essential personal finance lessons every high school student should learn:

  1. Setting a budget to pay for living expenses

The cost-of-living expenses such as rent, groceries, and utility bills can be a serious shock to young people who are just beginning to pay for these things independently. To avoid living beyond their means, it’s important that adolescents learn how to set a budget and stick to it. The FTC provides a free lesson on budgets as well as a simple budgeting worksheet as a helpful starting place.

  1. How to pay for what comes next after high school: College, career tech, travel, and more

There are so many pathways students take after graduating high school, such as going to college, entering trade schools or apprenticeship programs, or taking a gap year to work, intern, or travel. It’s important for students to consider the financial demands of their post-secondary plans when making decisions about their next steps. There are many resources available to students to help them afford these opportunities, including a free Paying for College unit from Next Gen Personal Finance, grants and scholarships for college and trade schools, and work exchange programs across the country and abroad.

  1. What is a credit score and how does interest work?

The average American gets their first credit card between the ages of 18 to 20, and this is likely the first exposure they will have to building their credit score. Students who are headed to college are also likely to encounter a need for student loans. Borrowing money is a common practice, especially for young people who are just beginning to build wealth. Before applying for a loan or credit card, it’s important to understand how interest works and how much borrowing money will ultimately cost. Additionally, young people should learn how to strategically repay debts, focusing on paying off high-interest accounts to minimize costs.

  1. Why it’s important to financially prepare for emergencies

A recent Bankrate survey found that only 44 percent of Americans would pay for a $1,000 emergency from their savings account, with nearly one in four U.S. adults saying they have no emergency savings at all. Building an emergency fund takes time, so it’s important that students learn about regularly making contributions to a dedicated savings account in order to prepare for emergencies. Without an emergency fund, young people may have to utilize credit lines with potentially high interest rates in order to afford unexpected expenses.

Students also can benefit from learning about:

These lessons, along with many more, are a vital part of developing healthy financial habits that can help students navigate the transition to financial independence. Educators hold the key to providing students with equitable access to financial education opportunities and play an important part in improving the financial literacy and wellbeing of the next generation.

As we celebrate National Financial Literacy Month, we are advocating for the continual improvement of financial education programs across the country. We hope to see more schools and districts prioritizing financial education and advocating for updated legislation to support young people in building financial literacy and making positive financial decisions for their futures.