NORTH CAROLINA — North Carolina public school students will be required to pass an economics and personal finance class in order to graduate starting with the 2020-21 freshman class.
N.C. House Bill 924 was passed into law in July 2019, mandating the development of the course to teach financial literacy. According to the N.C. Department of Public Instruction, the national standard for K-12 personal finance education defines financial literacy as “the ability to use knowledge and skills to manage one’s financial resources effectively for lifetime financial security.” This is the definition published by Jump$tart, a a national nonprofit coalition of organizations that states it has a commitment to advancing youth financial literacy.
The bill states that the financial literacy course would cover topics such as the true cost of credit, choosing and managing a credit card, borrowing money for an automobile or other large purchase, home mortgages, credit scoring and credit reports and planning and paying for post-secondary education.
“Financially literate people use their knowledge and understanding of economics, money, credit, saving, investing, budgeting, etc. to make informed decisions about their personal finances,” according to NCDPI. “From everyday spending to long-term financial planning, effective management of money, credit, savings and investments requires individuals to use their financial knowledge to plan for and further personal goals.”
Author and financial guru Dave Ramsey states on his website that financial literacy is changing communities for the better as the “the majority of people don’t know how to handle their money.”
Ramsey referenced a report by the National Financial Educators Council that had more than 17,000 people from all 50 states take a National Financial Capability Test. According to Ramsey, the report states that less than half — at 48 percent — of participants were able to pass the 30-question test that covered topics like budgeting, paying bills, setting financial goals and other personal-finance related subjects.
“It’s one thing to learn how to add and subtract in elementary school, but it’s something else entirely to actually apply those principles to your own finances,” Ramsey states on his website. “Most Americans live paycheck to paycheck, and it’s largely because of a gap between what the math says they can afford and what they actually spend.”
To combat this, Ramsey said many young people are increasing their financial literacy knowledge through personal finance courses in high school. According to Ramsey, Ramsey Solutions Research surveyed over 76,000 American students who had taken a personal finance class, and he states that many of the results are a “stark contrast” to the NFEC report.
According to Watauga County Schools Superintendent Scott Elliott, the personal finance course would take the place of an American history class. Students are currently required to take two American history courses, and with the new requirement they would take one history course as well as the new personal finance course.
The N.C. public school system has operated under its current graduation requirement of four credits of a social studies-type course since 2012, according to Elliott. Prior to that time, Elliott said students were required to earn three credits in social studies — civics and economics, U.S. history and world history. He said that the new requirement will revert to what school systems were requiring before 2012, which included personal finance as part of the curriculum in civics and economics.
The new economic and personal finance course will be the last in the four-course sequence of high school social studies requirements, Elliott said. He added that students would typically take the class during their junior or senior year depending on other course requirements a student may have and the overall master schedule for the school.
Elliott said that while most educators likely agree that students will benefit from more personal financial education, there is a concern about combining the two American history courses while at the same time expanding the scope of the curriculum for that one course.
“We see this all the time in legislatively mandated curriculum at all grade levels,” Elliott said. “More and more gets added but rarely does anything get taken away. At some point, we need to focus on the essential standards of what every student needs to know and be able to do in high school while realizing that when we add something into the curriculum or the school day, something else needs to be taken away.”
That being said, Elliott said he has been a strong proponent of financial education his entire teaching career. This is due in part to him having a seventh-grade math teacher who regularly provided lessons about financial topics such as the importance of having a budget, the connection between education and high-paying jobs, risks of abusing credit cards and carrying excessive debt as well as the power of investing and benefiting from compounding interest.
“Like me as a seventh-grader, a lot of students do not learn these lessons outside of school or see them modeled in a society that values consumer spending and debt,” Elliott said.
Elliott incorporated personal finance in the high school English classes he taught using materials from the National Endowment for Financial Education. He added that many WCS teachers include personal finance lessons at various grade levels.
Additionally, community partners from local banks and businesses come into the schools to teach lessons on budgeting and goal setting. Students can also take personal finance and business finance courses in the current Career and Technical Education course of study.
“Having an entire course right before graduation will be very valuable to our students and help them to begin thinking, if they have not already, about how to manage their money and ensure that money mistakes do not hinder them from reaching their life goals and dreams,” Elliott said.