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This article is the latest in the FT’s financial literacy and inclusion campaign.
As David Penn presses the computer keys, the Wheel of Fortune spins on the whiteboard at the front of his financial literacy classroom for teenagers, coming to a halt with a heartbreaking scenario: “My neighbor’s air conditioner leaked water and destroyed my computer.”
Some students laugh with relief because they’ve allocated one of the 17 plastic beans on the worksheet in front of them to the insurance premium, while others sigh as they are forced to remove three beans from other items to pay for a new computer, taking money away from money they had planned to spend on clothes, concerts, and dining out.
Penn’s class at Stuyvesant, a highly competitive public high school in New York state, is a short walk from Wall Street, but even basic lessons on budgeting, saving, and borrowing quickly drew students, and the class is now one of a growing number of financial literacy efforts in the country supported by funding and resources from wealthy entrepreneurs and individual donors.
“This is such an important subject,” said Peng, the math teacher, who found that from low-income immigrant Americans to the privileged children of CEOs, “whatever their background, their knowledge is very limited.”
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Many of his students go on to work in the finance industry, but “many don’t even take personal finance classes in college. We’re trying to break down the stigma that money is a private thing.”
Peng is part of a nationwide movement to improve financial literacy education to address the economic toll of Americans’ lack of financial literacy.
“If I were to give an F a grade for financial literacy among American adults, it would be an F,” says Annamaria Lusardi, a Stanford University professor and authority on the subject. “Students are only answering half the questions on our tests. That’s astonishing in a country with one of the most developed financial markets.”
Lusardi found that, like most other countries in the study, basic numeracy skills are lacking, with many unable to understand the impact of inflation on their income or calculate the annual fees on a 2% loan.
Other gaps reflect the growing complexity of finance. “The world is changing rapidly,” Lusardi says. “You can’t rely on common sense or on your parents, who have never been exposed to crypto and never had to pay off student loans. It’s different in a country where young people in college are starting their economic lives with debt.”
Among the resources she recommends are materials from Next Gen Personal Finance, a nonprofit co-founded by Tim Lanzetta, an entrepreneur who previously worked analyzing executive compensation packages for Fortune 500 companies and helping families make better college-funding decisions.
A few years ago, he set himself the goal of making it possible for every high school student in the United States to take a semester-long personal finance course. Now, Lanzetta’s organization offers training for teachers, a support network, and resources like classroom games to keep students engaged. “Finance can seem intimidating, exclusive and jargon-filled. We need to make it topical and fun,” he says.
He started Next Gen Personal Finance after volunteering to teach financial literacy at a low-income high school in East Palo Alto, near San Francisco. “We saw how eager the kids were to learn, and then we saw a ripple effect with their parents asking about investing for retirement,” he says. “It has a multigenerational impact.”
More than 30 states allow online gambling, but one-third of young people don’t know the difference between a debit card and a credit card.
But Lanzetta remains concerned about financial messaging on social media. “One look at YouTube or TikTok and you’ll see no shortage of get-rich-quick schemes,” he warns. “More and more products are being marketed to young people, and more than 30 states now allow online gambling. Yet a third of young people don’t know the difference between a debit card and a credit card.”
But he’s optimistic about the goal of offering a semester-long course to every high school student. Half of the 50 states, from New Hampshire to Oregon, have introduced legislation requiring schools to teach significant, stand-alone financial literacy classes, according to a survey conducted by Next Gen Personal Finance. Ten of those states have already fully implemented the measure, and the remaining 15 are in the process of doing so.
Some states, including New York, have resisted, arguing that financial literacy is covered by broader education guidelines and that extra lessons can’t be inserted into school timetables. But New York state is currently debating standalone guidelines, said David Anderson, president of Working in Support of Education, a New York nonprofit that receives funding from wealthy donors and family foundations.
These advocates know that if this education is beneficial to the children of Wall Street bankers, it must be even more valuable to students from poor families.
Andrew Jack is the FT’s international education editor. X
This article is part of FT Wealth’s in-depth coverage of philanthropy, entrepreneurs, family offices and alternative and impact investing.
