California just became the 26th state to require high schoolers to take a personal finance class to graduate. Mandating these courses in public education is widely supported but it has taken the country a long time to implement.
According to Next Gen Personal Finance, only five states had the same requirement five years ago. Research from Next Gen and Tyton Partners found that California students who take the one-semester course will experience a $127,000 lifetime benefit.
Straight Arrow News Business Correspondent Simone Del Rosario spoke about the benefits of early financial literacy with Maya Corbic, an accountant by trade and author who has built an online community around teaching kids about money.
The following has been edited for clarity. You can watch the full interview in the video at the top of this page.
Simone Del Rosario: Maya, first of all, I wanted to get your reaction to this California law and others like it.
Maya Corbic: I think that’s fantastic news. We’ve been waiting for this for a long time. And I’m excited to see that more states are actually making financial literacy part of their curriculum. I think it’s a long time coming. We’ve needed this for a long time.
Simone Del Rosario: One class is better than nothing but is it enough?
Maya Corbic: I don’t think it’s enough. I really feel like this is something that should be part of our curriculum from early grades, including kindergarten all the way until the end of high school. As somebody who has been teaching financial literacy to kids, I do find that sometimes we have to repeat certain lessons because they forget and we also have to make them applicable to real life.
Another thing is that these financial literacy curriculums do not cover some lessons such as investing and how to invest so that we can become financially free. They don’t really go into details of debt and credit scores and some other lessons, but something is better than nothing.
Simone Del Rosario: What do you know about what is going into these courses and can you expand more on what’s missing from them?
Maya Corbic: I do know for sure that financial literacy that’s currently be introduced in schools is not covering the basics of investing and all different aspects that we should be teaching our children when it comes to investing. And investing is really important because we cannot only save our way to wealth.
Saving is a first step to investing because we need to save some money in order to invest it. But if we’re only saving our money, there is a huge difference in terms of return, especially if we’re looking long term. Somebody who’s saving the same amount for 10 years versus investing the same amount of money for 10 years, the results are drastically different.
Simone Del Rosario: You said that we should be teaching kids as soon as kindergarten. What do you teach kindergartners about money?
Maya Corbic: What I have been teaching kindergarteners about money is just the basics. Kindergarteners are smart enough and they can understand the difference between needs and wants. They understand that needs are things we need for survival, wants are nice to have but we don’t need them for survival, and that we should spend our money on needs first and wants.
They’re too young to understand that some things that we buy can be a mixture of needs and wants. So that’s something that I teach much later on. But they can also understand different currencies and different monetary denominations that we have.
They also pick up on habits, too, if, for example, parents are giving them allowance. What I mean by habits is for them to learn that as soon as they get some money that comes in, they need to take a portion and save it. This is a habit that they can practice into later years so that when they become adults, this is just something that they do.
Simone Del Rosario: I know you’re in Canada. Is the public education system there more advanced when it comes to teaching kids about finance?
Maya Corbic: I wish I could say this, but it’s not. We had some recent changes as well and some of the financial literacy curriculum was introduced to our schools at a high school level. I don’t know all the details, but again, it seems like it’s a good start. It’s just not covering enough.
I feel that the parents will have to pick up wherever the school stops and teach the additional lessons that the schools do not teach.
Simone Del Rosario: At least here in the United States, nearly half of these states have yet to take up this type of curriculum. What would be your message to those states that aren’t taking this step?
Maya Corbic: My message would be that they really seriously need to consider this because this is something that is going to benefit their citizens, the next generation, and it can make the next generation that much better off. Their lives can be better off and then the generations that will come after them. So it is definitely in their interest to do this for the benefit of these young people.