Seeking Alpha

Do Not Teach A Course In Financial Literacy In High School

by: John Lohr
John Lohr
Pension fund analyst, Securities Lawyer, Fiduciary expert, Everything Fiduciary

What do you do about our kids learning a life skill?  A high school class isn't it.

See if you pass FINRA's financial Literacy test, below. If not, don't admit it.

Who is equipped to help the next generation?  You are.

Financial literacy is the understanding of money such as taxes, savings, bills, retirement, budgeting and paying for school and investing.

But, according to FINRA (you remember our friendly broker SRO), 70% of Americans can not pass this simple test of basic financial principles:

1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? (A) More than $102. (B) Exactly $102. (C) Less than $102.

2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? (A) More than today. (B) Exactly the same. (C) Less than today.

3. True or False: Buying a single company's stock usually provides a safer return than a stock mutual fund.

If you don’t answer these correctly, don’t admit it. Answers are at the bottom of this article.

“Wait a minute,” you say, “doesn’t this refute your headline.”

“No,” he said, “it proves it."

“Explain,” say you.

“If I don’t, I have nothing to write about”, say I.

We know Americans in general are poor in managing their financial-related issues. For instance, we have:

Over $1 trillion in credit card debt ($6,375 per consumer).

$1.4 Trillion in student loan debt. (2016 graduates have an average of $37,172 in student loan debt).

Many of us believe that financial literacy is a core life skill that should be taught in every school and college.

“Wait another minute,” you say “you’re contradicting yourself.”

“No, just keep reading,” say I.

Here are some expert takes:

“State mandates requiring high school students to take a personal finance course have no effect on savings or investment behavior,” economic researchers from Harvard, Wellesley College and the Federal Reserve Bank of Chicago found in a study in 2014.

Robert Weagley, professor of the personal finance department at the University of Missouri says, “In 2016, 22 states required students take a stand-alone personal finance course”

Two (or 3) words state the problem with the financial literacy course solution.That problem:


And “course.”

The journal, Management Science, published a study that concluded, “studying financial literacy has a ‘negligible’ impact on future behavior and that within 20 months almost everyone who has taken a financial literacy class has forgotten what they learned.” The Chicago Federal Reserve and Wellesley cited in the above study agree: “high school classes imparting financial wisdom don’t seem to make a whit of difference when it comes to how we handle our finances.”

Economist Lewis Mandell offers this explanation: “Financial education doesn’t work when it’s given in advance of when the consumer needs it.”

Here’s the prime tenet of the financial literacy movement, and, frankly, it’s pie in the sky.

The financial world is complicated, right? If people don’t do the right things, the answer must be educate them! Teach kids about budgets and living within their means, offer employees an investment information session—and voilà! Twenty years later, credit card debt and the retirement savings crisis will be things of the past, and we’ll all be on the road to financial nirvana.


A class, even one mandated by the state, with standards and everything, does not fix minimum wage jobs that beget other minimum wage jobs, losing the battle against inflation or the behavioral patterns of spenders that are bombarded with advertising to buy, buy, buy, no payments for 90 days and so on.

What this country needs is basic financial behavioral principles introduced in kindergarten, integrated with other basic learning skills like math, science, art (what is the cost of crayons, anyway?), reading. Incorporate financial mores into real life concepts, all the way through trade school or graduate school.

Start with the teachers. Every one of them should be adequately trained and resourced. They should be made made aware of the importance of financial literacy and relevant pedagogical methods, and how it relates to their subject competency. They should be taught how to incorporate it into their classroom and they should receive continuous support, tools and training to teach financial literacy in their class the rest of their teaching lives.

That’s the only way to turn the battleship of behavioral patterns. It will take a school generation if we start now.

If you prefer, you can resort to the tried and untrue conventional wisdom failures:

Give the kids a class (or one course);

Have them get a job (minimum wage);

They should learn this at home (parents are incapable);

Involve them in household finance—vacations;

Parents should go to school board meetings and demand teaching financial literacy (right!);

Pay them for work;

Have your child meet with a CFP® professional and ask about their career.

OR teach them:

• Don’t spend more than you earn;

• Contribute to your 401(k) at least to the match;

• Don’t carry a balance on your credit card;

• Save for retirement before you save for the kids’ college;

• Don’t listen to the clowns on TV.

They’re all good ideas, (especially the last one) but not teachable in that one class or course, or at most homes.

So who should teach them?

Academia? No, it would never get out of the theoretical study/committee phase.

Math teachers? Ok, but with the resources, tools and support I mentioned above.

All teachers? Yes.

Who should design the courses and support and tools for the teachers?

Professors? Never.

Us? Ok, we’re getting closer here. Who do you know that is better educated to know the basic principles of personal finance than the professionals and investors here on Seeking Alpha.

Before you ask: yes, we’re doing it. If you think you can help this endemic problem, contact me. I can’t pay you, but you’ll get a sense of satisfaction. See

Think of yourself as our Advisory Board, a volunteer in your local community, or a local leader of the change.

ANSWERS: 1. A; 2. C; 3. False.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: We are MoneyCulture, a 501c-3 educational charity that teaches personal finance in person, online and in seminars and writings--all pro bono. See