Millennials & Student Data
According to the study, only 34.1% of all students have ever taken a high school course with financial-education related topics. Of the students with at least some college or higher-level education, only 40.7% have taken a course surrounding any financial-education related topics. This means close to 35% of all Americans graduate the education system without any formal education in personal finance.
This lack of personal finance education in the United States appears correlated with the level of confidence Millennials have in managing their own personal finances. About 23.4% of Millennials took a neutral stance feeling neither confident nor unconfident in managing their finances. But another 16.8% felt unconfident in managing their finances.
Women were generally less confident in their understanding of financial topics compared to men. Only 13.8% of female students stated they were very confident in managing their own finances, whereas 20.2% of male students stated they were very confident. When men and women were asked to gauge their confidence level in understanding specific financial areas, women were statistically less likely to say they were very confident in nine of the thirteen areas: credit cards, debt management and consolidation, interest and interest rates, saving and investment, risk management and insurance, loans and borrowing, refinancing, purchasing a vehicle, and retirement planning.
Individuals who selected they had at least one major area of higher education study in Business, and those who studied Accounting, Finance, Economics, Military Sciences, or Public Administration and Policy had more confidence in managing their own finances compared to students who pursued other majors.
Among the educators surveyed in the study, only 25.1% of active teachers received some form of financial literacy education in high school and 30% have taken a higher education course covering financial-education related topics.
Most educators in the sample size were older than the Millennial generation, with 88.5% being older than the age of 30, and 56.8% being 45 or older. However, there is only approximately a 5% difference in how many of our educators received any financial education compared to the current youth generation, indicating that not only are many our educators themselves not formally trained in personal finance, but also there has been little done in personal finance education reform from one generation to the next in the United States.
Based on the survey, only 10.3% of educators taught finance, a finance related course, or a course with financial-education related topics. Yet, many educators do feel confident managing their own personal finances. Roughly 74% of educators stated they were either confident or very confident in managing their own personal finances, and 40.5% of educators stated they were either confident (30.4%) or very confident (10.1%) they would be capable of teaching personal finance or financial literacy. The total amount of educators that are confident they could teach finance is about four times the number of educators that actually teach in the finance field.
Beyond how U.S. educational school systems can affect financial literacy and confidence, the survey looked also into how home life influenced one’s relationship with personal finance. The study found that personal financial understanding and development appeared correlated with one’s family upbringing.
Millennial survey respondents were asked how frequently they discussed personal finance or learned about financial literacy when living at home with choices being: almost never, not often, sometimes, often, and very often. Only 23.6% of families discussed finance either often or very often at home, but children whose families discussed finance very often at home were more than twice as likely to take a finance related course in high school compared to children from families that almost never discussed finance (52.0% vs. 25.4% respectively). As adults, Millennials who discussed finances at home very often were significantly more confident at managing their own personal finances with 80% stating they were confident and only 12% stating they were unconfident. Comparatively, only 43.7% of Millennials who almost never discussed finances at home growing up were confident at managing their own finances, with 29.0% being unconfident.
This trend continues into higher level education with 48.9% of children from families who discussed finance at least often at home deciding to take a financial course in higher education. Comparatively only 29.8% of students from families who almost never discussed finance at home took a higher level education course with finance.
Family income and income disparity appears to be correlated with personal finance education. According to a 2007 Center for American Progress report, lower income families tend to struggle more with both money management and credit. Those who grew up in less affluent families were also less likely discuss personal finance at home. Only 15.5% of those who grew up in a household with an annual income of less than $25,000 (17.3% of respondents) discussed finance either often or very often at home. Comparatively, 28.7% of family households who earned over $100,000 annually (25.0% of respondents) discussed finance either often or very often.
This can be problematic as those who are most likely to be affected by financial issues are also the least likely to discuss finance at home, therefore less likely to pursue financial literacy education from one generation to the next.
A Call for Action
Currently, there is no federal oversight on classroom curriculum in the US. Instead, schools are regulated at the state level. As of 2016, according to the Council of Economic Education, only 17 states require high school students to take a course that includes personal finance instruction with only five states requiring a stand-alone course. Only seven states – Oregon, Utah, Colorado, Texas, Missouri, Michigan, and Georgia – have standardized testing with personal finance concepts.
When Millennials were asked if personal finance and financial literacy should be taught before high school graduation, 88.0% agreed it should be part of the high school curriculum. Almost 60% of Millennials believed that high school students should be required to pass a personal finance or financial literacy test prior to graduation.
Active educators also strongly believe personal finance should be taught before high school graduation. Amongst teachers, 90.3% agreed or strongly agreed financial literacy should be a required subject prior high school graduation. 55.5% felt passing either a course or test should be a requirement to high school graduation.
Millennials and educators were asked to select their top three financial topics that should be prioritized in the classroom. Budgeting and money management, and saving and investment were found in both survey groups.
Budgeting and money management: 75.1%
Credit Cards: 50.2%
Saving and Investment: 50.1%
Millennials: Top 3 Financial Literacy Topics
Budgeting and money management: 64.1%
Saving and investment 48.8%
Loans and borrowing 30.0%
Doug Lebda, CEO of LendingTree states, “Having an early foundation in financial literacy would significantly help the average American through critical financial decisions, like saving for retirement, financing a car or buying a home. With a better understanding of basic financial concepts, not only will we be more empowered to make smarter decisions regarding our finances, but we'll be able to ask the right questions when needed.”
Lebda continues, “The approach towards personal financial literacy in the United States is currently very reactive, instead of being proactive. Instead of having an ingrained understanding of basic financial and economic concepts, some Americans are forced to find less-than-ideal solutions when met with financial roadblocks.”
LendingTree’s survey indicates a large number of Americans want to more formal financial literacy education in the classroom. While there is likely room for Americans to make a stronger effort to be more proactive in their own financial understanding at home and before personal financial matters occur, having professional educators laying a financial groundwork for Americans could have a significant positive impact towards overall financial literacy in the United States. With proper financial literacy education, Americans can be better prepared to address financial situations when they occur and ask the right questions to clarify details that are often hidden.
For this study, LendingTree conducted two surveys with two sample population groups. One surveyed group consisted of 1,004 U.S. Millennials from ages 18 through 35. The second sample group surveyed included 1,000 currently active U.S. educators including teachers currently enrolled in a pre-service program and higher-level education professors. Non-active educators and retired educators were not included. Data was collected between December 3rd through December 14th, 2015 via SurveyMonkey.