Teaching Financial Literacy

financial literacy
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Financial literacy is as important as ever. Financial misinformation is now broadcast over social media by unscrupulous would-be wolves of Wall Street who are using new technology to propagate classic “pump and dump” penny stock schemes, says John Pelletier, director of the Center for Financial Literacy at Champlain College. 

Teaching students about this financial misinformation is vital, Pelletier says. As is giving students the tools to understand cryptocurrency, NFTs, intense inflation, and student debt, along with more traditional lessons in financial literacy. 

Financial Literacy: Teaching and Engagement Resources 

There are free online resources with ready-to-go financial lesson plans, videos, and classroom exercises. 

TeachFinLit.org is geared toward high school students and offers detailed lesson plans, complete with videos and outside sources, on topics such as budgeting and spending and credit and debt. For middle school and high school students, Pelletier recommends Next Gen Personal Finance, which also offers a wealth of free multimedia financial curriculum resources, in addition to providing online personal development courses in finance geared specifically to teachers. 

“What you want is fun, engaging classroom activities, and videos or things of that nature,” Pelletier says. He adds that making your lesson as real-world based as possible helps build student interest. 

Expanded Curriculum  

As with many subjects, much about the way financial literacy is taught in schools goes beyond what is done in individual classrooms. 

Currently, 25 states require personal finance be taught to all students, a number that has nearly quintupled in recent years. “In June of 2019, only five states required personal finance,” Pelletier says.  

Pennsylvania, Wisconsin, and Oregon are the most recent to mandate it, and the concept has bipartisan support, Pelletier says. “There's a couple other states that seem to have a decent probability of passing a bill,” he adds. 

When financial literacy isn't mandated, students who attend school in wealthy districts are more likely to receive financial literacy education than those who attend school in poor districts, according to a report by Nex Gen Personal Finance.  Schools in which financial literacy is not taught are more likely to have large minority student populations. 

“I personally think it's a social justice issue,” Pelletier says. “It's least likely to be brought to the students who need it the most. I know a lot of people hate mandates, but if you don't require it, what we do see is it's hard to get taught.” 

Cryptocurrency and NFTs  

Many young people are drawn to cryptocurrencies, decentralized digital currencies, and NFTs (non-fungible tokens that are basically one-of-a-kind digital items that can be traded and sold). 

While Pelletier has his concerns about the risk of crypto and NFT investments, he says educators shouldn’t dismiss students who are interested. “You can't denigrate this,” he says. Instead he advises using your students’ passion for these topics to engage them in a conversation around financial literacy. “I focus on having a discussion with young people about facts,” he says. “It is a fact that since Bitcoin was introduced in 2009, its value has dropped by more than 50%, eight times.” 

While enthusiasts may point out it has risen in value many times as well, Pelletier says that this intense volatility makes it risky. “The risk of owning Bitcoin is probably three to four times greater than the risk of owning a stock,” he says. However, he also suspects that that volatility is part of what makes students so interested in these types of investments. The get-rich-quick appeal to Bitcoin and Dogecoin is similar to what helped fuel young people’s interest in AMC and Gamestop back in early 2021, says Pelletier. 


The rate of inflation currently also provides a good opportunity to engage with students about financial literacy. Since 2008 inflation had been very minimal, which makes the current spike particularly jarring. “We're dealing with the highest inflation rates in 40 years, and so I think it's very hard for us as individuals to deal with that,” says Pelletier. 

The concept of inflation might seem abstract to some students. “Kids have to understand that inflation is like a tax,” Pelletier says. “I think the problem that adults and young people have with inflation is they don't understand basic math.” 

For example, if you got a 3 percent raise at the beginning of 2024, the inflation rate for the year is projected to be 3.3 percent, which would mean you effectively are earning less than last year. 

In addition, Pelletier says it’s important that students understand that inflation does not impact all aspects of the economy in the same way, and that soaring gas and grocery prices hurt certain populations more than others. “For example, if you've got two people with the same commute and one makes $200,000 a year and one makes $50,000, how much are they paying for gas as a percent of their income right now, when it's five bucks a gallon?” he says.

Important Financial Concepts 

Pelletier stresses long-term investing. “My view of investing is slow and steady wins the race,” he says. 

He often tries to illustrate this when he talks with students by explaining compounding interest. For example, Pelletier tells students what will happen if an 18-year-old invests $10,000 in the S&P 500 Vanguard Index Fund and leaves it alone for 50 years. Assuming the index fund averages a 7.2 percent annual return on investment, which is conservative, that person will double their money every decade. Ultimately they will end up with $320,000 by the time they retire at 68. But Pelletier says many students, and those older than them, have trouble understanding compound interest.

Another common mistake is that few students realize how the decisions of where to attend college and what to study have huge financial implications.

“I would argue probably one of the top three most important financial decisions you'll make in your life is made when you're like 18,” Pelletier says. Thinking around these decisions are often too short term. “I can get this degree in two ways: One is a cheap way. One is not a cheap way, but I really like the school with the lazy river.” Student loan debt is often not part of the thought process.

Focus on Behavior Not Just Concepts  

Pelletier notes that finance is one of those topics in which knowledge isn’t always enough. “You can have somebody who aces a class on financial literacy that fails in life in their behavioral choices,” he says. 

He likens it to teaching students topics such as safe sex, nutrition, and substance abuse prevention in which even the best classes will not elimate all risky behavior. However, by prioritizing financial lessons, Pelletier believes educators can make a difference.  

While not much time is spent in K-12 educating students about money, once they graduate, it will be an important topic for them. “Not a day will go by that they're not thinking about money. How to make it, how to spend it, how to save it,” Pelletier says. “And yet it's like the least thing you're taught in school.” 

Erik Ofgang

Erik Ofgang is a Tech & Learning contributor. A journalist, author and educator, his work has appeared in The New York Times, the Washington Post, the Smithsonian, The Atlantic, and Associated Press. He currently teaches at Western Connecticut State University’s MFA program. While a staff writer at Connecticut Magazine he won a Society of Professional Journalism Award for his education reporting. He is interested in how humans learn and how technology can make that more effective. 

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