Saturday, February 27, 2010

Financial Education: A Look at Teachers

In previous posts, I have highlighted the importance of teaching financial literacy in high schools. I have discussed student financial literacy and the difficulties associated with teaching. In this post, I want to turn the attention to teachers themselves. Teachers are pivotal to the success of financial education. What do teachers think of financial literacy and how prepared are they to teach financial literacy courses?

A study by Wendy Way and Karen Holden titled “Teachers’ Background and Capacity to Teach Personal Finance: Results of a National Study” published in the Journal of Financial Counseling and Planning in 2009 sheds light on this important issue. More than 1,200 K–12 teachers, prospective teachers, and teacher education faculty representing four census regions responded to questions about their personal and educational backgrounds in financial education. There are several important findings from this study that I would like to highlight:

First, almost all teachers recognize the importance of and need for financial education. As many as 89 percent of teachers agree that students—in order to graduate from high school—should either be required to take a financial education course or pass a financial literacy test.

Second, teachers do not feel prepared to teach personal finance. Fewer than 20 percent of teachers and prospective teachers reported feeling very competent to teach any of the six personal finance concepts normally included in educational standards, such as those identified by the Jump$tart Coalition and in the NEFE High School Financial Planning Program®. Teachers and prospective teachers felt least competent in the more technical
topics, such as risk management and insurance, saving and investing, and financial responsibility and decision making.

Third, state education mandates appear to have no effect on whether a teacher has taken a course in personal finance, has taught a course, or feels competent to teach a course. Several of the states in the study had mandated financial literacy in high school, so while we might expect teachers in those states to be different, that doesn’t appear to be the case. Currently 80 percent of states have adopted personal financial education standards or guidelines, yet the majority of teachers (about 65 percent) in those states admit not feeling qualified to teach to their state’s financial education standards.

These are worrisome findings; while teachers recognize the importance of financial education, they admit limitations in their preparedness and ability to teach personal finance topics. If you feel discouraged, let me turn now to some encouraging findings reported in this study.

A majority of teachers are open to further education in financial literacy. Interestingly, those who report an interest in additional training are those who have had a college course in personal finance or who have backgrounds in vocational education or social studies. While the majority of teachers engage in a number of financial behaviors that typically help ensure financial security, they express the same financial concerns of the general population. In other words, not only do teachers seem interested in engaging in training to teach financial literacy but that same training may offer personal benefits to the teachers themselves.

This is an important study and has several implications for the discussion surrounding financial education in high school. Clearly, it is not enough to simply mandate financial education. Mandates alone do not make people any smarter. Instead, resources should be devoted to training teachers so that they can implement the standards that are required in financial education. Teachers would welcome this education, may themselves benefit from it, and believe in the importance of financial education. Thus, there are good reasons to expect training to be effective.

And parents, community leaders, and all of you “ambassadors” of financial literacy (identified in my previous blog), please be active, too. If our schools are to adequately prepare students, then consistent, comprehensive, and sound instruction in financial literacy needs to be an important component in every school’s curriculum. But, to adequately prepare our students, we first must prepare our teachers.

A link to the paper mentioned in this article is provided below:


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Carlos Sera said...

Well said, Annamaria.

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Nick Buettner said...

Dr. Lusardi,

Thank you for your ongoing advocacy for financial literacy and teachers. We wholeheartedly agree that "mandates alone do not make people any smarter".

That's why we've worked with teachers, students and consumer advocates to develop an easy to use, web driven financial literacy curriculum for high schools. It's more important than ever that students and teachers get the information they need to be financially literate.

I think our program would be of interest to you and your readers and I'd welcome the opportunity to talk with you about it. You can also learn more at


Nick Buettner
Chief Operating Officer
FoolProof Financial Education

Katherine Griffin said...

An instructionally complete program like MoneyU®, which doesn't depend on the subject-matter expertise of the teacher for her students to succeed, is a good way for the teacher to learn financial skills alongside the students.

Surely, if state legislators want to pass a mandate so students learn essentials of personal finance, it follows they should want their teachers to learn the essentials, too.

In most states, these same underprepared teachers are expected to review materials for congruency with the curriculum, for efficacy, and for engagement. It's quite literally the blind leading the blind!

Katherine Griffin

olga lednichenko said...

I think finance and microeconomics should be taught at high school : the pros and many and the cons - few ..

and i think, teachers - should be taught - as well..

olga lednichenko

from nesher, israel

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I mean the rapid adoption of new information technologies has expanded the scope and utility of our financial products, so, too, has it increased our means for addressing some of the associated educational challenges.

Ingrid Bruynse said...

In South African schools, we have focused on training teachers to deliver financial literacy within the curriculum. We now realsie we need to include teachers personal skills needs in managing their money.

Ingrid Bruynse
Bright Media

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