Although I can’t promise I would have paid super close attention in a formal personal finance class, I’m convinced it would have been far more useful than several of the required courses I took in school.
Note: Yes, I use the Pythagorean theorem all the time in my day-to-day life… Just kidding!
School subjects are valuable, but including personal finance in the curriculum would give students a practical foundation that could shape their futures. Many people graduate without retaining everything they learned, but even a basic grounding in personal finance can dramatically improve someone’s financial outcomes.
Personal finance wasn’t mandatory when I was in high school, but I wish it had been. More schools are now requiring personal finance classes, and I believe every student should receive this instruction because financial literacy can significantly affect a person’s life.
Too many people lack a basic understanding of money management and their own financial situation. While academic subjects matter, personal finance deserves equal emphasis.
As I noted in the post “Are You Better Than Average?” the statistics are sobering:
- 68% of people live paycheck to paycheck.
- 26% have no emergency savings.
- The median retirement savings is under $60,000.
- The average household has $7,283 in credit card debt.
- The average student loan balance is $32,264.
I believe that stronger personal finance education would help many people improve their financial health.
But shouldn’t parents teach their kids personal finance?
That’s a frequent argument against school-based finance classes, but I don’t agree. Many adults—both young and old—struggle with money, so they may not be the best role models or teachers for their children’s financial habits.
Additionally, not every child has a family able to teach financial skills. Leaving those kids without instruction is unfair. If schools aim to prepare young people for the real world, teaching personal finance makes perfect sense.
Below are the essential personal finance topics I believe everyone should learn, whether through school or other means.
How credit cards and loans work
Many people don’t fully understand credit cards, loans, and interest, which allows myths to spread. Common misconceptions include:
- “You have plenty of time to pay off debt, so only pay the minimum.” False: paying only the minimum lets interest accumulate quickly—pay more when possible.
- “You always have to pay credit card interest.” False: if you pay your balance in full each billing cycle, you can avoid interest altogether.
- “Credit cards are another source of income.” False: treating credit as income leads to debt.
- “You should carry a balance to improve your credit score.” False: you can build good credit without paying interest; I’ve had a high credit score without carrying balances.
Everyone should understand how borrowing works—interest rates, minimum payments, and how credit affects long-term finances. Proper knowledge is one of the best defenses against needless debt.
How to write a check
Although checks are less common today, many people don’t know how to write one. There are still situations where checks are useful or cheaper:
- Some businesses charge extra for credit card payments—tuition, taxes, deposits—so paying by check can save money.
- Giving a monetary gift.
- Traveling in an RV or visiting remote locations where only cash or checks are accepted.
- Paying rent in places that prefer checks.
It’s a simple skill and worth learning for the occasional times you’ll need it.
How to manage a budget
Everyone should use some form of a budget, whether detailed or simple. Budgets aren’t glamorous, but they provide essential clarity about your finances. The basics to know:
- How much money you earn.
- How much you spend.
- Where you might be wasting money.
A budget helps you see how much you can safely spend in each category, where to cut back, and how to meet financial goals. It’s a tool for paying off debt, saving, growing income, preparing for retirement, and pursuing financial independence.
The importance of an emergency fund
Younger people often feel invincible, but emergencies happen to everyone. An emergency fund protects you from sudden, costly events—but 26% of Americans have no emergency savings at all.
An emergency fund is vital because it helps if you:
- Lose your job: savings give you time to recover without immediate financial panic.
- Have high medical costs or limited insurance: a fund covers unexpected healthcare bills.
- Own a car: repairs can be expensive and unpredictable.
- Own a home: unexpected home repairs like roof or flood damage are costly.
Having an emergency fund provides peace of mind and reduces stress when unexpected expenses arise. Learning its importance early can prevent people from resorting to high-interest debt in crises.
The steps to invest
Learning how to invest is another essential lesson. Investing helps you:
- Save for retirement.
- Prepare for future goals.
- Allow your money to grow over time.
Many are reluctant to invest because they were never taught how or why to start. Investing makes your money work for you—keeping cash idle means you lose purchasing power over time. For example, $1,000 invested with an 8% annual return for 40 years grows to roughly $21,724. Adding regular contributions dramatically increases that outcome: contributing $1,000 each year at 8% for 40 years grows to about $301,505; starting with $10,000 and adding $10,000 annually for 40 years could grow into roughly $3,015,055.
Understanding basic investing steps and the power of compound returns is crucial to long-term financial success.
Do you think schools should put more emphasis on personal finance? Why or why not, and what additional topics should be included?