Why Virginia Teens Have a Big Edge Over Teens in Florida

Florida Gov. Rick Scott vetoed a pilot project at the end of June that would have taken a big step toward mandating personal finance as a standalone course in high schools throughout the state. Meanwhile, Virginia's high school class of 2015 just became the state’s first to finish with a personal finance requirement.

The developments highlight the on-again, off-again nature of the effort to make financial instruction a part of every child’s education. “Virginia's class of 2015 enters the real world with a comparative advantage,” says Nan Morrison, CEO of the Council for Economic Education, adding that she was “disappointed” Florida killed the Broward County project, which would have cost just $30,000.

Financial education is gaining traction globally. The U.K. and Australia have mandatory money management classes in schools. Last month, Canada announced a national strategy for financial literacy and is rolling out 50 programs as part of Count Me In, Canada. These will include websites with educational resources for students as well as seminars and workshops for seniors.

The U.S. has a formal national strategy for financial capability, approved in 2006 and updated in 2011. Yet a persistent barrier to progress, at least at the school level, is that individual states have domain over their school curricula. There can be no federal mandate for financial education, as in other countries. So organizations like Jumpstart Coalition and the CEE have been leading the effort to establish standards for personal finance coursework and convince states to sign on, one by one.

It's been a long slog. Just 17 states currently require students to take a personal finance course, according to the most recent Survey of the States report; 22 require high school economics. Both numbers are trending upward.

Will There Be a Test on That?

But in education, unless students get tested on a subject it never really gets taken seriously. And in both economics and personal finance, the number of states with required testing in these areas is falling -- to 16 from a peak of 27 in economics and to six from nine in personal finance.

Why does this matter? Advocates for financial education see it as a buttress against the next financial meltdown. If more people understand more about how their mortgage works and why an emergency fund equal to six months of living expenses is important, they may be less likely to take on debts they cannot afford or default at the first hiccup in their financial plan. The idea is that this could stop any downward spiral in the national economy.

Yet even if that seems far-fetched, it is hard to deny the individual benefits of a population that knows more about retirement saving, budgets and credit. Millennials and younger generations will grow old in an age of greatly diminished public and private pensions; the sooner they understand that -- and many are getting the message -- the more likely they will be to save more at an earlier age.

So bravo, Virginia class of 2015. You have blazed an important path. One recent study found that a required high school course in economics and personal finance resulted in higher credit scores and lower delinquency rates as adults.

“In Virginia, since our course is relatively new, we have only anecdotal evidence,” says Daniel Mortensen, executive director of the Virginia CEE. “One student recently wrote a letter to the editor, talking about the required course and the value it has brought to his life.”

As for the setback in Florida, it is somewhat surprising in that the state last summer became the first to adopt CEE K-12 national standards for financial literacy. This is not a backward-thinking group of legislators. In effect, all the governor did was shoot down an attempt to strengthen what’s already in place: a required one-semester economics course that is 25% personal finance.

By comparison, Virginia’s requirement is two semesters -- about half of which is personal finance. So it’s not as though Florida is doing nothing about financial illiteracy; it just isn't doing enough.