These states are flunking financial education
America’s kids are falling behind in financial literacy — mostly because the schools are, too.
Two out of every three states earned a grade of C or worse in a new report card from the nonprofit American Public Education Foundation.
The Nation’s Report Card on Financial Literacy finds most states aren’t doing enough to teach public school students even the most basic financial concepts. Some kids don’t learn about saving, borrowing or investing until their mid-teens, while others aren’t required to study anything about personal finance at all.
Take a look at how your state performed and what you can do to fill the gap for your kids.
Which states make the grade?
Numerous studies show a strong link between financial literacy in youth and financial well-being later in life. For example, a 2015 study found Americans who took financial courses are more likely to have better credit scores and are less likely to fall into serious debt.
Yet only five states — Missouri, Nebraska, North Carolina, Utah and Virginia — were awarded an A grade for emphasizing this area of study. Each of these states includes financial lessons between kindergarten and Grade 12 and requires high school students to complete a standalone course on personal finance before they graduate.
Another 12 states earned a B grade for “above average” financial instruction.
A total of 19 states earned a C, 12 earned a D and three states — Alaska, the District of Columbia and South Dakota — got an F for failing to mandate any form of financial education in schools.
Several states — like Nebraska, North Carolina, Alabama, Vermont and Rhode Island — have made big strides in the last year, requiring high school students to complete half credits in financial education or embedding financial instruction into other courses.
However, plenty still lag behind when it comes to K-8 education — and the earlier you start, the better.
How to handle financial literacy at home
While many states are relying on parents to teach essential money matters at home, adults often struggle with personal finances themselves.
A global study found only 57% of adults in countries like the U.S. can answer simple questions about inflation, investing and interest.
So even if you’re no Warren Buffett, you can give your kids a huge advantage in life as long as you can teach the basics. Here’s how to get started:
Give them an allowance
Abstract lessons have their place, but one of the easiest ways to teach your children the value of money is to give them cash to manage themselves.
If you aren’t already, award them a few dollars each week for completing their household chores. You can get your kids more engaged by using a shared app that gives your kids a daily or weekly checklist and allows you to reward them with the press of a button.
An allowance is good for both young kids and teens to experience what earning and saving feel like — and when they spend their money, they learn how quickly it can deplete as well.
Open a kid-friendly bank account
After a certain point, an old-fashioned piggy bank won’t be enough. Look for an alternative that’s simple enough for your children to use and that you can monitor safely.
One financial service offers a debit card for kids, giving you the power to control what they can spend their money on, down to individual stores. You can even reward saving with parent-provided interest.
Practicing with banking and budgeting will prepare them for the future when they’ll need to manage their own accounts and choose which options are best for them.
Get them investing in companies they love
Even if you didn’t start dabbling in stocks until your 30s, start teaching your kids the basics now. More time in the market can make all the difference in the world, and you can never make up for lost years.
Talk to them about risks and rewards, gains and losses, and explain how the stock market works in broad strokes. It’s much easier to get them engaged if you focus on brands and businesses they recognize and use.
They can even start investing for real using kid-friendly apps. Thanks to fractional shares, they can invest as little as $1 in familiar companies like Apple and Nike. You’ll be able to set parental controls and receive notifications when they want to trade.
Teach them to deal with debt
This is a lesson your kids will have to learn soon enough when they get their first credit card — or student loan — but you can still explain the consequences of debt and interest while they’re young.
Talk to them about ways you have personally dealt with debt, whether through strict budgeting or refinancing into a lower-interest loan.
You might even integrate some of those concepts into their allowance system. For example, if your kids want to spend more money than they have earned on a new toy, mark that debt in their account for them to pay back.
How all the states ranked
Here's how all 50 states and the District of Columbia fared in the 2021 report card:
Missouri: A
Nebraska: A
North Carolina: A
Utah: A
Virginia: A
Alabama: B
Colorado: B
Illinois: B
Indiana: B
Iowa: B
Kentucky: B
Maine: B
Minnesota: B
Ohio: B
Oregon: B
Texas: B
Washington: B
Arizona: C
Delaware: C
Florida: C
Georgia: C
Idaho: C
Kansas: C
Louisiana: C
Maryland: C
Massachusetts: C
Michigan: C
Nevada: C
New Jersey: C
North Dakota: C
Oklahoma: C
Pennsylvania: C
Tennessee: C
Vermont: C
West Virginia: C
Wisconsin: C
Arkansas: D
California: D
Connecticut: D
Hawaii: D
Mississippi: D
Montana: D
New Hampshire: D
New Mexico: D
New York: D
Rhode Island: D
South Carolina: D
Wyoming: D
Alaska: F
District of Columbia: F
South Dakota: F
