• Rose Smith

Understanding the Derivatives yet Not Understanding How Loans Work: Why We Need Financial Literacy


If I had a dime for every time I heard “High school never teaches anything relevant to our daily lives,” I would likely be a millionaire. The claim holds some water depending on your intended career path, of course, but all too often students are taught seemingly irrelevant information while ignoring vital life skills. However, I remember being in one small elective class in my junior year of high school. It was called “Living in the 21st Century”, in which each quarter of the year had a different teacher and taught a different topic that was supposed to be relevant to our lives as students. One of these curriculums was taught by my pre-calculus teacher who took it upon herself to teach us financial literacy. It turned out to be one of the most relevant and interesting segments of the year. We learned about loans, budgeting, and bank accounts; my only complaint would be that it wasn’t long enough, because the class didn’t have enough time to flesh out its topics. I still remember the majority of what I learned during the three months it was taught. Personal finance courses were never offered at my school, so it was a treat to get a morsel of information out of that academic quarter.

According to a report by CNBC, 45 states (including Massachusetts, my home state) include financial literacy as part of their K-12 curriculum standards, but I don’t remember learning such skills. The closest I got to such a course was in the aforementioned class (which no one was required to take and was discontinued) and learning about how to sign a check and run a simulated lemonade stand in my 7th grade computer class. If Massachusetts is ranked number one in education, and this is what we got as financial literacy education, I can only imagine how other states fared. According to the same CNBC article, more than 1 in 6 students failed a financial literacy test done by the OECD (Organization for Economic Co-operation and Development).

Financial literacy is an integral skill, and it would be relevant to any student regardless of their intended career path. No matter if you are going straight into the work force or intending to go for 4-10 years of college education, you need to learn personal finance skills such as filing taxes, signing up for credit cards, and budgeting responsibly. According to CNBC, students that are taught more rigorously about financial literacy have higher credit ratings and lower rates of debt delinquency on average after they leave school. More financial literacy will mean a more enlightened populace regarding finance as a whole. Students will be able to help their parents as well as teach their future children about the skills they learned in school beforehand.

Ontario has recently laid the foundation for a financial literacy course plan that will be tested and released for all of the school districts by the fall of 2018. This is a step in the right direction, and the United States should follow in Canada’s footsteps. While it is important to keep classes like geometry and chemistry in curriculums (even if students don’t see the immediate relevance of the subject), it’s also time to implement financial literacy across the board. It is frequently underrated in its importance and need, even though it is one of the most necessary skills a person could have.

Rose Smith is the blog editor of Twenty-two Twenty-eight. When she isn’t writing about the world around her, she is often found listening to music, watching movies, and going on walks with her dogs. You can find her on Instagram here and on Twitter here.