By Amir Galban
Contributing Writer
Which of these is easiest to answer? Show your work.
3x + 5y = 12z. Find the value of x.
If I put $100 a month in a compound interest high-yield savings account that earns 1.5% a year, will that be enough for me to retire when I turn 55?
If both questions are equally befuddling to you, then you are likely a product of the New York state public education system—but at least you should have had an algebra class, even if you try to block it from your memory. The same can’t be said for having a financial literacy class in New York.
The lack of financial literacy among people is alarming, with one estimate saying that 70% of Americans are financially illiterate. In a global survey about financial literacy, only 30% got all three questions correct to relatively simple questions such as “Suppose you have $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow?” Choices were A) more than $102, B) exactly $102, C) less than $102, D) don’t know.
Many states have recognized the need for financial literacy among high school graduates, and 17 states have made taking a financial literacy course a requirement for graduation. Connecticut, Vermont, and Massachusetts have even included financial literacy in their K-12 standards.
New York, however, is one of eight states, along with New Jersey, that requires financial literacy to be offered, but it can be incorporated into other coursework rather than as a stand-alone course. Why hasn’t New York done more to improve the financial literacy of its high school graduates?
Alabama’s school districts decided to launch in 2013 a career preparation
course including what to expect from college as well as finance and business skills. Utah is another great example. In 2003, Senate Bill 154 was signed to add a finance course for one semester to graduate–one year later, the Utah State Board of Education enacted a required General Financial Literacy class.
States like Kansas, Florida, and Nebraska have in recent years approved required financial literacy classes, showing how they recognize the need for high school graduates to get a head start on learning how to properly manage finances. New York has thousands of kids in poverty and low-income areas where some financial education can go a long way in helping them learn the rules and find solutions on their own. Money is everything. It buys the tangibles and intangibles while allowing access to what’s needed. It is a mystery why one of the most populous and expensive states in the country does not better prepare its citizens to thrive in today’s complex world.
New York spends a median of $25,000 per student while Utah spends about $7,000. Although factors like population and economy matter, New York needs to take a page from other states’ books and implement a more robust financial literacy education component in our high schools.
Most importantly, good financial literacy makes sure we can enter the real world equipped with basic and advanced knowledge on money and how it should be used. We need a chance to not be blind when making our own financial decisions. Research from the Georgetown Center on Education and the Workforce show that college graduates earn on average nearly $1 million more than people with only a high school degree over their lifetimes. The truth is more students will see the value of higher education in terms of their earning power and the opportunities it provides to make their lives better if they have better financial literacy.
By the way, the answer to the question about the retirement account is no, it would not be enough, especially with inflation the way it is. The answer to the 2% interest income after five years is A, it’s more than $102. The algebra question? Ask a math teacher.
