YOUNG WEST VIRGINIAN'S NEED STRONGER FOCUS ON FINANCIAL LITERACY
By Jessica Pelletier and Amy Pridemore
Big money in sports can mean big headaches for athletes not grounded in financial literacy. An astonishing 15.7% of NFL players reportedly file for bankruptcy within 12 years of retirement.
Now that college athletes are seeing an influx of cash with new NCAA rules allowing athletes to profit from the use of their name, image and likeness, West Virginia University is determined to help student athletes benefit from the change without suffering the pitfalls. On April 13, WVU in partnership with Robinhood will hold a “Financial Education Partnership Celebration” to focus on the school’s commitment to financial literacy education.
This is a good first step. And West Virginia also deserves praise for making financial literacy education available as an optional class in high school. Nevertheless, West Virginians carry some of the highest credit card debt in the nation, with an average balance of $4,686. And West Virginia students who graduated in 2020 are starting their careers encumbered by an average student loan debt of $29,208. Clearly, more should be done – and at an earlier age – to make young West Virginians proficient managers of their personal finances.
If it’s any consolation, West Virginia is not alone. Most Americans don't feel comfortable with their finances. Only 20% of Americans believe that they have learned enough money management skills to think their lack of financial knowledge won't hurt them financially. Nearly three-fourths of Americans rank their finances as the top stress in their lives. That is understandable, with 56% of families unable to cover an emergency over $1,000 and 45% of households carrying credit card debt.
A lack of financial literacy is particularly acute among high school students. A survey of 100,000 incoming college students found that 92% felt that “they needed more education, information, and/or support to be able to pay off their college loan.” In another national study of high school seniors, personal finance was ranked as the most important subject that students needed to learn in school for their future success. Yet, less than a third of them had ever taken a personal finance course in school.
Currently, 23 states have a financial literary requirement in place, either as a separate class or part of other coursework. Florida passed a financial literary requirement just last month, and legislators in Massachusetts are debating a similar bill. According to the data, states are reaping startling returns on their financial literacy program investments. A study looking at almost 16,000 college students from 15 states found that students from states with required financial literacy courses had the highest levels of financial knowledge. Students from these states were more likely to save and pay off their credit cards in full each month. Those students were also less likely to max out their credit card, make late credit card payments or be compulsive buyers.
While West Virginia requires every school to at least offer a financial literacy class, students are not required to take the course. Disturbingly, the state received a grade of “C” on the National Report Card for Financial Literacy from the American Public Education Foundation in 2021. Real-world consequences await those who don’t know how to budget, make savvy purchases or plan for their financial futures. West Virginia’s young people represent the state’s future and more must be done to prepare them to manage their finances.
At a minimum, financial literacy programs should be expanded and mandated for every high school student. But schools must establish the building blocks of financial literacy even earlier. Studies have shown that children form financial habits by the time they turn seven. That’s why it’s important to introduce elementary school students to the basics of financial literacy. Free financial literacy resources that defray costly investments by schools are available for teachers and students of all ages from a number of local and national non-profit organizations, FitMoney among them.
Managing finances shouldn't be some dark art that only a privileged few are permitted to master. Nor should West Virginia’s young people be disadvantaged in an increasingly competitive world. Everyone wants better lives for their children, and financial literacy education provides an effective, essential tool to help them reach their goals.
Jessica Pelletier is the Executive Director of FitMoney, a non-profit organization that advocates for financial literacy education and provides quality K-12 curriculum that develops smart money habits.
Amy Pridemore is the Director of the Center for Financial Literacy and Eduaction and a Service Assistant Professor of Finance at the West Virginia University John Chambers College of Business and Economics.