Taking a personal finance class has a lifetime benefit of $100,000


Teaching the next gen financial literacy

Taking a financial education class in high school does pay off.

In fact, there is a lifetime benefit of roughly $100,000 per student from completing a one-semester course in personal finance, according to a recent report by consulting firm Tyton Partners and Next Gen Personal Finance, a nonprofit focused on providing financial education to middle and high school students.

Much of that financial value comes from learning how to avoid high-interest credit card debt and leveraging better credit scores to secure preferential borrowing rates for key expenses, such as insurance, auto loans and home mortgages, according to Tim Ranzetta, co-founder and CEO of Next Gen.

But then there is the ripple effect, he added.

“Students bring these lessons home,” Ranzetta said. “When you take that $100,000 in savings and multiply it across families and communities, it’s an incredible economic engine.”

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“I get to show students the value of having a savings and checking account and then they are able to share that with their parents,” said Kerri Herrild, who has been teaching personal finance at De Pere High School in Wisconsin for 18 years, referring to what’s known as the “trickle up effect.”

“Getting this basic knowledge — that’s powerful,” she said.

Making the grade in financial literacy: More states require students to take personal finance course

Meanwhile, the trend toward in-school personal finance classes is gaining steam.

As of 2024, half of all states already require or are in the process of requiring high school students to take a personal finance course before graduating, according to the latest data from Next Gen.

In addition, there are another 35 personal finance education bills pending in 15 states, according to Next Gen’s bill tracker.

‘The research is overwhelming’

Many studies show there is a strong connection between financial literacy and financial well-being.

“The research is overwhelming,” Ranzetta said.

Students who are required to take personal finance courses starting from a young age are more likely to tap lower-cost loans and grants when it comes to paying for college and less likely to rely on private loans or high-interest credit cards, according to a study by Christiana Stoddard and Carly Urban for the National Endowment for Financial Education.

Students are also even more likely to enroll in college when they are aware of the financial resources available to help them pay for it.

“Our results show that high school financial education graduation requirements can significantly impact key student financial behaviors,” the authors said in the report.

Further, students with a financial literacy course under their belt have better average credit scores and lower debt delinquency rates as young adults, according to data from the Financial Industry Regulatory Authority’s Investor Education Foundation, which seeks to promote financial education.

In addition, a report by the Brookings Institution found that teenage financial literacy is positively correlated with asset accumulation and net worth by age 25.

I tell them this is going to be the most important class they are going to take in their life.

Christopher Jackson

personal finance teacher at DaVinci Communications School

“I start off my class by telling them that my No. 1 goal is to affect their children’s children,” said Christopher Jackson, who teaches personal finance to 12th graders at DaVinci Communications High School in Southern California.

“I tell them this is going to be the most important class they are going to take in their life,” Jackson added.

As part of Jackson’s course, students open Roth individual retirement accounts with an initial grant of $100, which many then maintain on their own.

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Among adults, those with greater financial literacy find it easier to make ends meet in a typical month, are more likely to make loan payments in full and on time and less likely to be constrained by debt or be considered financially fragile.

They are also more likely to save and plan for retirement, according to data from the TIAA Institute-GFLEC Personal Finance Index based on research over several years.

“The need is real, the effect is real, and it motivates me as a teacher,” Jackson said. 

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About the Author: Tony Ramos

Tony Ramos is a seasoned expert in business funding and real estate investment, with a remarkable journey spanning over 20 years. His expertise in flipping properties and implementing the buy-and-hold strategy has positioned him well in the real estate investment sector. Tony's profound understanding of financial strategies extends to teaching individuals and businesses how to become debt-free and leverage the power of LLCs for funding. For insights, mentorship, or collaboration opportunities, Tony can be reached at businessfundingnopg@gmail.com. Connect with him to unlock the potential of smart financial strategies and embark on a path to financial success and freedom.

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