Gov. Ron DeSantis signed Senate Bill 1054, or the Dorothy L. Hukill Financial Literacy Act, into law March 22. This bill will require high school students to take a financial literacy class in order to graduate.
It is important for students to be financially literate going into college. For many students, this is their first chance to be independent, so they need to be equipped with the skills to navigate the world of finance.
The National Financial Educators Council defines financial literacy as “knowledge and competence of how to deal with money.”
These classes teach students about budgeting, taxes, investing and a variety of other money management skills. The goal is to help students feel comfortable around money and enable them to spend, save and borrow responsibly.
Many college students already have substantial credit card debt. Roughly a third of college students already have over $1,000 in credit card debt, according to a 2019 study by EverFi.
Without the proper education, students are likely to go further in debt later in life. The average household in 2020 had over $6,000 in credit card debt, as stated by the 2020 U.S. Census.
By educating students on healthy spending and borrowing habits, financial literacy classes can help them keep credit card debt to a minimum.
These classes also provide students with the skills to achieve and maintain a high credit score. A person’s credit score will affect many major aspects of their life including home buying, renting and applying for loans.
A Sallie Mae study in 2019 also showed that roughly 40% of students either don’t know their FICO credit score or don’t have one.
Increased financial literacy will not only help students individually, but also the economy as a whole. The pandemic has been detrimental to the economy, as many people lost their jobs or stopped going out to stores. The World Economic Forum said the pandemic caused 114 million people to lose their jobs in 2020.
The National Endowment for Financial Education stated in a 2020 survey 88% of Americans said the pandemic has caused them stress about their personal finances.
Financially literate college students have the skills to actively and responsibly participate in the economy. They are better able to understand the effects of their financial activity and make more informed decisions regarding what to do with their money.
This is crucial to the recovery of the economy after the damage done by the pandemic.
The recent Dorothy L. Hukill Financial Literacy Act will affect the graduation requirements for students who enter high school during the 2023-24 school year, but schools should begin implementing financial literacy classes as soon as possible.
When students are educated on how to responsibly navigate their finances, they will be far better off in college.