The leading voice for excellence in public finance
The leading voice for excellence in public finance

Thought Leadership Thursday

How we measure financial literacy is just as important as teaching it

Dave Young 2021 500x600

Thought Leadership Thursday Article

How we measure financial literacy is just as important as teaching it
April 14, 2022
State Treasurer
State of Colorado

Dear Colleagues,

Growing up in a working class family, we never received cash stuck in a birthday or holiday card, which is why I remember the time I got a $25 U.S. Savings Bond from my grandmother. It came in a birthday card, when I was seven or eight years old. Twenty five dollars was a fortune to me. As badly as I wanted access to that cash then, I knew my payout would double to $50 if I waited 20 years for the bond to mature.

This was my first memory having to deal with money, but certainly not my last. And it was my introduction to financial literacy as a child.

Financial literacy refers to a person's ability to make good financial decisions. Without it, people will struggle to make ends meet, to plan their finances, and to achieve economic well-being.

As a former junior high school math teacher, I know that far too few students — particularly those from low-income backgrounds — receive any personal finance education  at school. Yet they are expected to make big financial decisions about student loans and budgeting for living expenses after graduation.

Teaching students to become financially literate through evaluating, analyzing, and utilizing personal finance practices that positively impact quality of life will position students for success throughout their career and adulthood.

Though the Colorado State Board of Education strongly encourages local school district boards to include personal finance courses and curriculum throughout the state, only about 25% of districts include personal finance in their approved graduation qualifications.

Financial education is a critical component of skills -pre-school through high school students need in order to become financially literate and financially independent. I support financial literacy as part of an ongoing educational curriculum; however, I stop short of supporting a state-designated high school graduation requirement. I struggle with this because how we measure whether someone is financially literate matters.

If we have a graduation requirement, then there must be learning outcomes that are expected, and how we measure those learning outcomes must match the complexity of learning. I fear that we'll default to bubble tests like we always have, students will pass the bubble tests, and we'll hang the proverbial "Mission Accomplished" sign up, when in fact, students aren't actually financially literate.

One of the reasons I'm so passionate about financial literacy is because it holds the key to solving how we measure true learning in other academic areas. We know someone has really learned because we can observe a change in their behavior.

If someone is really financially literate, we should be able to observe a change in their financial behaviors. But you can't measure a change in behavior on a bubble test – you have to set up on-going systems that, with the permission of the person, capture the real changes in the way they handle their money over a long period of time.

If we can figure this out for financial literacy, I think it would be most beneficial to the rest of the educational system as we try to develop better ways to measure learning in other topic areas.

Frankly, some of this is well-known in the "non-tested" areas like the arts, science, physical education, and early childhood.  But, the learning of math and language arts are especially being driven by superficial testing methods that are simply inadequate.

Everyone is impacted by their level of financial literacy. Increasingly, people are expected to understand and make decisions in a complex financial environment, including managing and selecting credit cards, loans, banking, and insurance, and planning for retirement.

Some money problems Americans currently face could be avoided if financial literacy was taught earlier in school. Financial literacy classes teach students the basics of money management: budgeting, saving, debt, investing, giving, and more. That knowledge lays a foundation for students to build strong money habits early on and avoid many of the mistakes that lead to lifelong money struggles.

I challenge us during April, which is Financial Literacy Month, to think of creative ways we can implement financial literacy in the curriculum, while being able to accurately observe changes in financial behaviors over the course of a student’s lifetime that lead to financial empowerment.


Dave Young
State Treasurer of Colorado

NAST Thought Leader Thursday banner