Blog Post

Why Financial Literacy Should Be Taught in K-12 Schools

Ellie Margulis
November 23, 2022

People’s level of financial literacy affects their quality of life and can cause a lot of financial stress. 75% of teenagers in the US lack confidence in their knowledge of personal finance, according to a survey done by Annuity. In the same survey, American teenagers say most of their financial knowledge comes from their parents. K12 schools can help students by incorporating financial literacy into their overall curriculum. K12 employees need to be financially literate as well to help their students. 

What is Finance? 

Before you can understand financial literacy, you need to understand what finance is first. Finance is the management of money. Finance includes saving, investing, budgeting, borrowing, and much more. There are also three main categories of finances. 

  1. Personal Finance: How an individual deals with their money and includes banking, purchases, and use of financial products like credit cards and investing. 
  2. Corporate Finance: Any financial decision that is made to run a business. 
  3. Public Finance: The care for the welfare of the public which includes budgeting, taxes, and the drafting of fiscal policies. 

What Is Financial Literacy?

Individuals who are financially literate have an understanding of basic financial concepts and can apply them to their own life. Financial literacy includes the following below: 

  • How credit works and how to improve your credit score
  • How to open a bank account 
  • Paying bills on time 
  • Using debt responsibly 
  • Saving money for retirement 
  • Comparing financial products like credit cards and investments 
  • Creating and managing a budget 

Finances affect every aspect of our lives. The sooner kids understand financial concepts the better their overall lives will be. Over time, financially illiterate people run into more problems, such as poor spending habits and unmanageable debt. It’s harder to undo bad habits than it is to learn new ones, so financial literacy must be built into the curriculum for kids. 

Benefits of Teaching Financial Literacy in K-12 Schools

Teaching financial literacy in school has a lot of positive impacts on kids. For example, according to the Financial Industry Regulatory Authority (FINRA) those with a higher financial literacy spent less than their income, and 65% had set aside a three-month emergency fund. 

For those with lower financial literacy, only 35% have spent less than what they earned, and only 42% had a three-month emergency fund. When you teach kids what finances are and how to manage them at a young age, they are better prepared for the future and more likely to make smart decisions. 

1. Students Learn to Make Their Own Financial Decisions

When students are taught financial literacy early on in their lives, they are more likely to make wise decisions with their money. Teaching financial literacy in school also encourages students to be independent and make their own financial decisions. Students need to learn financial literacy early on in order to avoid incurring debt through the usage of credit cards, how to take out loans to buy a car, and grow savings through investments. Being financially literate will also help students create and work towards financial goals. Making your own financial decisions will also lead to a healthy financial life. 

2. Students Understand The Importance Of Savings

The pandemic exposed how unprepared most people were for a financial emergency. According to the Federal Reserve, most people don’t have enough money to cover an unexpected $400 expense. Teaching students about saving money is essential to their overall understanding of finances. Even if they only start saving a little bit here and there, it will serve them in the long run. Also, when teachers start helping their students understand the importance of savings, their savings will increase. 

3. Students Understand Their College Loans and Consequences

Many students don’t understand student loans and their consequences when deciding and applying to college. Students might not understand that skipping student loan payments can result in bankruptcy. Students need to be educated on student loans so they can manage them responsibly when they take them out. Making student loan payments on time and in full is essential, especially if you want to eventually qualify for programs like PSLF that forgive student loan debt borrowers who work for the government and nonprofit organizations, like public K12 schools. 

4. Students Tend to Avoid Debt and Maxing Out Credit Cards

Without financial literacy, a credit card can seem like free money to people. You can swipe a credit card anywhere for purchase without instant consequences because you must pay the minimum amount each month, right? However, credit cards have huge interest rates that cause the balance to build and eventually lead to even the minimum payment being hard to pay off. 

46% of college students have credit card debt, and 27% say their debt exceeds $2,000, according to US News. How did college students get into credit card debt? Most likely because they weren’t educated enough. Financially literate students tend to avoid debt and maxing out their credit cards. Early on in students' lives, teaching financial literacy in K12 education can have a substantial positive impact on them later on. 

5. Students Improve Their Mental Health 

Finances have a ripple effect on every aspect of your life. According to the National Library of Medicine, there is a direct link between financial worries and psychological distress. Finances are the number one cause of stress in the US today, and people with high financial stress report having more health problems. Being financially literate will help people manage daily stressors to lead to a healthier life. By teaching financial literacy in K12 schools, students will also have improved mental health. 


Financial literacy should be taught in schools because it helps students be prepared for the future and prepares them for success. When kids are taught the basics of budgeting, saving, debt management, etc., they can avoid lifelong money problems. Your Money Line can help because we can provide your employees with the tools and resources they need to be financially healthy, so they can put their best foot forward when teaching their students to be financially literate. 
Request a demo today to help your staff and students.