Why Most High Schoolers Don't Know How to Manage Their Money

Students must overcome a steep personal-finance learning curve.

Ten states use attendance counts from a single day to determine district funding for the school year.

In Pictures: Basic Money Lessons You (Probably) Missed in High School

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Instead, Gallagher learns about money management in a personal-finance course—required by the state of Missouri for graduation—taught by Susan Lidholm. Lidholm's class is a one-semester course, but the school also offers an accelerated version online in the summer. It covers such topics as budgeting, banking, using credit wisely, and investing in human capital. "We all make mistakes in the finance world, but our class can help them avoid some of those catastrophes," Lidholm says.

As part of its consumer skills unit, Lidholm's class provides students with a real-world simulation that teaches them how to make practical decisions with their money. The students go to a car dealership, choose a vehicle, and then research what would be a fair price, as well as calculate the estimated personal-property and sales taxes.

Curriculum material is a minimal expense, Lidholm says. In lieu of a textbook, the Missouri Council on Economic Education provides support to teachers, supplying them with lesson plans and other materials. "We don't use a textbook because the economy changes so quickly that textbooks would become outdated fast," Lidholm says. She adds that there is a lot of free material available to teachers, so educators can create a tailored curriculum that meets their state's requirements.

Perhaps a testament to the importance of making the class a requirement is that several students in Lidhom's course say they wouldn't have taken the course if it was optional, but they're glad they did. "I probably wouldn't have taken this by choice, but if I had the chance to do it over again, I would take it because we've learned so much about finances and how they apply to our future," says Joshua Baumer, a junior at Rock Bridge High School.

Personal-finance competitions are another way for teachers to foster student interest in the subject. Lidholm served as coach to a Missouri team that included students from Rock Bridge in last year's National Personal Finance Challenge. To prepare, the students met twice a week to go over an expansive list of possible questions—chiseling down to such specifics as when you can cash in your IRA without incurring a penalty (it's 59 1/2). After winning regionals, the team went on to claim the national championship title. Lidholm says it's gratifying to watch her students take such an interest in personal finance that they spend time outside class to learn about it.

Timing and empowerment. Is high school the right time for students to take a personal-finance class? Or should it be taught earlier, in middle school or even elementary school? The Maryland State Board of Education's president and vice president, along with the state's interim superintendent, wrote a column published in the Washington Post in February arguing that financial education can't wait until high school, citing experts who say children begin to develop their understanding of money much younger.

Yet Lidholm says she thinks teaching the class to high school juniors syncs well with what's going on in their lives—they're getting driver's licenses and figuring out how to finance their first car, becoming more aware of gas prices, and starting to earn money from part-time jobs. And as juniors, they can learn about the implications of taking on student-loan debt while they're considering what college to attend. It's also worth learning how credit works, before they go off to college and get bombarded with credit-card offers their first day on campus.

Proponents of financial literacy say getting high school students to feel in control of their own financial lives is a matter of finding the right teacher, the right curriculum, and enough governmental support.