COVID-19 began in February 2020 as a health crisis, but as time goes on and more Americans lose their income, savings and businesses, it has extended beyond just health into an economic crisis as well. Similar to other catastrophes, such as Katrina and 9/11, when America faces a crisis our financial vulnerabilities are exposed and the need for financial education is obvious. According to a new Charles Schwab Financial Literacy Survey, half of all Americans (50%) would experience financial hardship if they had to cover an emergency expense of $1,000 or less in the next 30 days.
Carrie Schwab-Pomerantz, president of Charles Schwab Foundation, says that financial literacy is a survival skill that everyone needs. “Financial education gives individuals the skills, knowledge and confidence to navigate our complex financial world. And the lack of financial literacy takes away opportunities from people,” said Schwab-Pomerantz. “Financial literacy can lift people up. It gives them the opportunity to create more mobility and help get out of difficult situations.”
The impact of financial illiteracy is not lost on the American public. The survey showed 89% of Americans agree that lack of financial education contributes to some of the biggest social issues our country faces, including poverty (58%), lack of job opportunities (53%), unemployment (53%), and wealth inequality (52%).
According the the latest Survey of the States, created by the Council for Economic Education, only 21 states require high school students to take a personal finance class – and Americans want more. When the Schwab survey asked respondents what they would teach their younger selves about personal finance based on what they know today, Americans said the value of saving money (59%), basic money management (52%), and how to set financial goals and work toward them (51%).
Nearly two-thirds (63%) of U.S. adults chose financial education as the most important supplementary graduation requirement to math, English and science, compared to 43% who chose health and wellness education.
On a scale of 1-100, Americans rated money management (62.9) as the most important skill for kids to learn, edging out the dangers of drugs and alcohol (60.5), healthy eating and exercise habits (58.3), and safe driving practices (57).
To educate our kids on finance, Schwab-Pomerantz says it’s going to take work from all angles. Parents must start teaching their kids about money at home and at an early age. She suggests incorporating concepts such as budgeting and saving into daily activities or into dinnertime conversations. Companies can do their part by supporting financial literacy programs and providing support to local schools. For teachers looking to provide financial education in their class, the Charles Schwab Foundation provides support for qualifying financial literacy projects at DonorsChoose by matching every donation dollar-for-dollar during two yearly campaigns. Since 2016, this collaboration has provided more than $2,000,000 and funded 10,000 projects.
At the highest level, she says financial literacy must become a national priority. “We are letting Americans down by not putting it into the schools. I hope this crisis will force us to see the importance of financial education as a nation.” Additionally, as the pandemic exposes more social and economic inequalities, she believes financial education is an equalizing force. “Just think, if we mandated finance in the classroom, we would reach every young person, no matter their background. This would create opportunities for every child, and allow each child to rise.”