Americans Want Financial Literacy… Now!

Dear Readers,

Today, I'd like to turn the tables and ask you a question:

Let's say you could design a basic high school curriculum. Outside of core courses like Science, Math, and English, how would you rank adding financial literacy as a requirement—as compared to other topics such as health and wellness, career development and college planning, arts and music, and sports?

This is just one of many questions that my team and I recently posed to thousands of Americans through a national poll. If you put financial literacy at the top of your list, you're in agreement with 63 percent of our respondents.

Let me back up a minute. We first fielded our poll in February with the goal of assessing the importance of financial education in today's world. Of course, at that time we had no idea of the health crisis that was about to upend just about every aspect of our lives.

Therefore, a few months later in June, concerned that the pandemic might change the results, we repeated several key questions. Somewhat to our surprise, the results stayed the same. Even in the midst of a global health crisis, the majority of Americans expressed the same sense of urgency for improved financial literacy, even prioritizing financial education over health and wellness education.

Looking deeper, we also asked our survey participants to reflect on their personal money habits, the role that financial literacy plays in society, and their thoughts on how we can improve our national financial IQ. Let's take a closer look at what we learned—and how we can use these insights to create a more financially secure future for all Americans.

For me, the most unsettling finding in our survey was that half of our respondents said they would face financial hardship if they had to cover an emergency expense of $1,000 in the next 30 days (and one-third would struggle to come up with $500). This is consistent with previous studies, most notably one done in 2019 by the Federal Reserve.

As troubling as this sounds on the surface, the reality is even more serious. The implications of not being able to pay for an emergency—from possibly avoiding medical treatment to eviction or even having to drop out of school—can be devastating and long lasting.

Perhaps because of this acute vulnerability, the majority of our respondents also said they wished they had learned about the value of saving money at a younger age. If they could turn back the clock, they said they would also teach their younger selves basic money management, how to set and work towards financial goals, and how to invest.

When asked about the future, the majority believe that teaching the next generation personal finance basics will better prepare them to face the unexpected and will have a positive impact for years to come.

Another powerful statistic we uncovered is that 89 percent of our respondents believe a lack of financial literacy contributes to larger social issues—from poverty, to fewer job opportunities, to wealth and gender inequality.

I agree—100 percent. The need for financial literacy is especially urgent for women and minorities, who continue to face unique challenges at home and in the workplace. Yes, we've made some strides. But for the most vulnerable segments of our society, increased financial stability, improved confidence in financial decision-making and expanded opportunities would be a life changer—impacting everything from getting a college education, to supporting a family, to following a chosen career, to starting a business. Financial literacy isn't a cure-all, but it is an essential key to unlocking doors to opportunity and financial security.

I've been advocating for more financial education in our schools for two decades, and our survey respondents overwhelmingly agree. When asked who (outside of family) should have the primary role in providing financial education, two-thirds of our respondents said our schools.

When you think about it, it just makes sense, but currently only 21 states mandate some degree of financial education in their schools. This is helpful for these more fortunate students, but the reality is that every child in America should be taught the fundamentals of money management including budgeting, saving, and investing. To do any less, in my opinion, is nothing short of neglect.

When I look back to February when we first fielded our poll, that pre-pandemic world seems like a completely different universe. But now that our vulnerabilities have been so dramatically exposed, it's time for all of us to do whatever it takes to improve our individual and national financial health.

Parents, talk openly and honestly with your kids about your financial challenges and successes. Teach your kids to live below their means so they can save for an emergency and for the future. Educators, fight for more teacher training and financial literacy courses in your schools. Employers, incentivize your employees to save for their retirement, and for a rainy day. Elected officials and community leaders, recognize that Americans are hungry for more financial knowledge so that they can make better choices and face the future with confidence and independence. We need sustained leadership and increased partnerships at all levels to advance financial literacy efforts.

And perhaps most importantly, every single one of us needs to continue in our individual quests to learn more about how to manage our money. Life evolves, emergencies happen, and the world changes. It's up to all of us to secure our financial future, for ourselves, our families, and future generations.

Have a personal finance question? Email us at askcarrie@schwab.com. Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries, contact Schwab.