If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?
a) Sales tax may be charged on the interest that you earn.
b) You cannot earn interest until you pass your 18th birthday.
c) Earnings from savings account interest may not be taxed.
d) Income tax may be charged on the interest if your income is high enough.
Do you know the answer to this question? Since Carmel High School is in California, probably not.
Financial literacy is described by Investopedia as “knowledge and understanding of financial matters.” While some states require high school student to take a financial literacy course, California has no such requirement. In fact, in June 2013 California and 10 other states were given “F” grades for high school financial education by the Champlain College’s Center for Financial Literacy. In California, from 2006 to 2010, six financial literacy bills were vetoed by the governor. Only seven states received A’s, in which a financial literacy class is required for students.
Isabella Bigley, a 2013 Monterey High School graduate, is now attending Brigham Young University in Hawaii. She says that such a class was not available at Monterey, but would be helpful for many college freshmen.
“As a college student, you are busy all the time, and finance is extremely important, especially for students with their first job and income,” Bigley says.
Karin Fuller, who graduated from Salt Lake City’s East High School in 2013, took a financial literacy class her junior year of high school. The state of Utah—one of the seven states that received an “A” grade—requires a financial lit class for all students prior to graduation. She says that it taught her details of money that most people wouldn’t even think of: paying taxes, saving money, credit scores, investing money, saving for retirement, how to fill out a 401K and insurance were all topics of the class.
“The class also encouraged students to be successful and get a higher education so they could support themselves. It was a reality check,” Fuller reflects. “What stuck with me the most was [the material] about debt and credit scores. I now want to have as little debt as possible and have a very high credit score. I really learned important life skills that are often not taught until later.”
While there is not an official financial literacy class at CHS, some fundamentals of personal finance are taught as part of AP Government and Politics/Honors Economics, history teacher Brent Silva says.
“There are things we talk about that do deal with day to day things that you have to deal with…that are not necessarily common knowledge to most people,” Silva says. “We talk about different things like insurance, how that works, also property taxes and things of that nature that most people don’t think about when they’re buying a house, and loans and how those work.”
University of Southern California freshman Ben Bransford, a 2012 CHS graduate, says he wished he had learned the basics of financial literacy in high school. While his father and uncle, both businessmen, tried to teach him the basics of finance, Bransford rejected it. Now, he says he can’t stop talking to them enough about it.
“My major, dealing in entertainment law, is now forcing me to learn all of these advanced financial topics that are based on basic topics that professors are assuming I knew prior to enrollment,” Bransford explains.
With many states, including California, adopting the new Common Core state standards, more financial literacy lessons may be supplemented into classes. The Council for Economic Education reports that selected resources have been aligned with CCSS, and some resources include specific financial literacy curriculums like Financial Fitness for Life.