November 30, 2023


Business&Finance Specialists

This state has the best personal-finance education in the U.S.

4 min read

Financial literacy is critical for managing money, but how well are states preparing their students?

Tennessee tops the list of U.S. states that provide the best financial education for its residents, according to a new report by financial-services company OneMain Financial. More than 99% of students at public high schools in Tennessee have what’s known as “gold-access” education, attending a school where they are required to take a personal-finance course in order to graduate. 

The OneMain Financial report looks at four things for each state: the number of active bills promoting some form of financial education in public schools, the status of economic education in public high schools, the level of personal-finance education offered and required, and the share of high-school students in gold-access schools.

New York, Utah, Alabama and Virginia followed Tennessee in the rankings. Although only 2% of New York’s high-school students are in gold-access schools, 11 financial- and economic-education bills have been proposed in the state this year. In the other three states, over 97% of students are in gold-access schools. (Tennessee, however, has a poverty rate higher than at least 30 other states.)

‘We think that understanding budgeting, saving, loans and credit cards as well as credit scores can set people up for a lifetime of financial well-being.’

— OneMain Financial’s report on financial literacy

“We think that understanding budgeting, saving, loans and credit cards as well as credit scores can set people up for a lifetime of financial well-being,” OneMain Financial said in the report. “So we looked closer at the latest legislation and conversations to gauge how we as a nation are giving people access to financial knowledge.”

In total, elected officials had introduced 69 bills focused on financial education in 27 states this year as of late October, according to the Next Gen Personal Finance Financial Education Bill Tracker. NGPF is a nonprofit that aims to bring personal-financial education to all students. Among those bills, 12 have been signed into law in 10 states and 8 were still in progress in 3 states. 

Roughly two dozen states require students to learn about personal finance, either in a dedicated course or integrated into other subjects, in order to graduate from high school, according to the Council for Economic Education‘s Survey of the States report. A few states, including Florida, passed bills in the summer of 2022 making personal-finance courses an individual requirement. 

Alaska, Wyoming and the District of Columbia do not have any personal-finance education requirements in K-12 schools and haven’t seen any new bills, according to the Council for Economic Education report. California also does not have any such requirements in place, but the state did pass a bill in July to create a statewide task force to look at the issue. 

(OneMain Financial declined to offer an assessment of states with the lowest performance in personal-finance education. However, the researchers did say that 68% of American high-school students do not understand credit scores and also noted that automobile loans rank behind mortgages and student debt for the largest share of household debt among adults. )

Americans consistently perform poorly in financial literacy survey

U.S. adults have correctly answered just 50% of personal-finance questions in an annual survey of financial literacy over the past six years, according to the 2022 report by the nonprofit TIAA Institute and the Global Financial Literacy Excellence Center at George Washington University.

Financial literacy tends to be lowest among younger Americans, according to the TIAA Institute and GFLEC’s Personal Finance Index, a list of 28 core questions in the annual survey. On average, some 54% of baby boomers answer all questions correctly, while 42% of Generation Z respondents answer all questions correctly. The questions cover everything from saving, investing and borrowing to earning, consuming and comprehending risk.

Financial-literacy levels have been “stubbornly resistant to progress,” according to analysts at the Milken Institute, a nonprofit think tank based in Santa Monica, Calif. “This result is particularly worrying for young people, who are likely to face greater financial challenges than previous generations,” researchers concluded in a 2021 report

Money-management skills needed

Over the past two years, the pandemic pushed many states to consider requiring financial-literacy education in schools. The pandemic disrupted jobs and incomes for many households and especially for low-income families. The push to promote financial education in schools appears to have reaped rewards in Tennessee: The state’s average credit score increased by 4 points to a “good” FICO
score of 701 last year.

Americans continue to face an uncertain economic outlook. Although inflation was down from 8.2% in September, according to the latest government data, it was still at 7.7% in October compared with a year ago. The rise in the cost of living finally showed some signs of cooling after inflation hit a 40-year high of almost 9% this summer over a year ago. However, high inflation has already taken a toll on millions of cash-strapped households.

Federal Reserve Vice Chair Lael Brainard indicated earlier this month that the Fed could slow its rate of interest-rate hikes. It has raised rates six times this year and raised the key rate by 0.75 percentage points in November for the fourth time. That pushed the short-term borrowing rate to a target range of 3.75% to 4%, making car loans and credit-card debt more expensive.  

Consumers also reported having to dip into their emergency savings to help cover monthly bills. At the same time, U.S. households have grown more dependent on credit cards and personal loans. Total bank credit-card balances reached a record $866 billion in the third quarter of 2022, up 19% from a year ago, according to TransUnion