Financial Education in California

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December 3, 2023

Inquiry-driven, this project may reflect personal views, aiming to enrich problem-related discourse.

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In the US, only 34 percent of Americans can answer at least four of five basic financial literacy questions. While several states have adopted financial education mandates in the past two years, California schools are still not required to offer coursework in financial literacy.
Additionally, only 27% of students in California high schools attend schools that offer personal finance classes. However, this contributes to a lack of financial literacy in the state.

While some argue that financial education should be the responsibility of parents or communities, several inequities prevent all students from being quality afforded financial education. In a study by FINRA Investor Education Foundation, women were less likely than men to report that they had received financial education. According to Next Gen Personal Finance. Immigrant status can lower financial literacy exam results by 30%, and African-Americans often have a financial literacy rate lower than the national average

Of any US state, California has the highest poverty rate at 13.2%, largely due to the lack of affordable housing and high cost of living. In such an economy, financial education is critical. Financial illiteracy causes Americans to lose thousands of dollars each year, and it results in
higher debt and bankruptcy. With required financial education, students can be afforded the opportunity to gain literacy skills, which reduces their chances of credit card fees and low credit scores.

Policy Options

Mandatory Class

Currently, 18 states require a standalone personal finance for secondary school. Some argue that the topic is critical, so one-semester class at minimum is necessary to prepare students properly. In a report by the Financial Industry Regulatory Authority, students in standalone
personal finance courses were observed to have improved credit scores and less payment delinquencies. The state of California could require all school districts to offer a financial education course, or school districts could make the course required for graduation if a
statewide mandate is not present. If implemented, teacher training is necessary.

Class Offering

Only 26% of California students have access to personal finance education, and 36 states, along with D.C., require schools to offer a
personal finance course. This option allows students the choice to engage in a personal finance elective, and it would ensure that everyone
has an equitable opportunity to learn. It also affords students with more freedom in their academic journeys. However, this also means that not every student will choose to participate in the class, and they may miss out on key personal finance learnings.

Course Integration

16 states require personal finance education, but also allow the coursework to be integrated into other subjects. Common integration
examples include incorporation in mathematics, economics, and social studies. This allows the students to avoid an additional graduation
requirement. It provides flexibility and valuable lessons that will contribute to their financial wellbeing. Integrated instruction allows for a
more contextualized approach. However, coordinating financial education with teachers in diverse subjects may be challenging, and
educator training is needed.

Tried Policy

Several states engage in the mentioned policies. Utah and Tennessee have required personal finance courses in high school for more than a decade, and both states received an “A” from Champlain College’s 2017 National Report Card on financial education. Studies have shown that students in these states are more likely to have budgets and savings accounts. In addition to a mandatory class, a requirement for a course offering is also impactful. Students who choose to engage in the class are less likely to default on student loans, and often have higher credit scores. Lastly, course integration also benefits students. Virginia previously required schools to offer the course at minimum, and the state previously ranked third on the JumpStart Coalition for Personal Financial Literacy's personal finance knowledge assessment. Mississippi requires students to take a college and career readiness course, and personal finance is one of the units covered in the course. A study by the Mississippi Department of Education in 2022 found that students who took the course were more likely to understand basic financial concepts than students who did not take the course.


  • Without financial literacy in place in secondary schools, students are more likely to experience financial hardship, such as bankruptcy and foreclosure. This also impacts society, as people who lack financial education are more likely to default on loans, affecting the US economy.
  • While parties have supported financial education, it is critical to look at the situation in a nonpartisan lens. Conservative candidates have opposed education mandates that would incorporate lessons on welfare benefits, while Democrats are more likely to include such components.
  • In creating a financial education mandate of any kind, the key stakeholders must be considered. The students should benefit from the personal finance learnings and gain the wisdom to make positive financial decisions. The California government would be responsible for developing the necessary curriculum and ensuring that schools are carrying out the mandate. Financially literate individuals are less likely to rely on government assistance, which benefits them. Lenders and banks want to ensure that borrowers pay their loans and avoid overdraft, and financial education reduces the risk of both of these. Additionally, schools have to provide financial education and train their teachers. Lastly, teachers are a key stakeholder because they have to undergo said training. A comprehensive proposal should consider these parties and accommodate each party.
  • Ultimately, the best action is for California to require their high schools to offer a personal finance course at minimum. Evidence suggests that requiring financial courses, or integrating the lessons into other courses benefits the students. However, a simple offering requirement is a feasible starting point for states like California, which lacks financial education mandates of all kinds

Rachel Labi

Fall 2023 Fellow

Rachel Labi is a social impact advocate and a finance student at Purdue University. At age 17, she co-founded Building Financial Freedom, her financial literacy organization that has educated 200+ individuals globally.

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