They can craft a poem in iambic pentameter, solve math problems using long division, and build a DNA model out of marshmallows and toothpicks. But ask a fourth grade student to create a spending plan for their weekly allowance and you'll likely be met with a blank stare.
Financial literacy remains notably absent from the U.S. education system, with efforts to increase awareness of money matters still largely targeted to adult consumers at the point of sale.
Some school administrators argue that financial literacy is a subject best left for the home. However, if financial smarts is a parent's wisdom to impart, it has to be noted that these are the same American parents who in many cases under-save for their own retirement and at their worst carry an average credit card balance of $15,204 per indebted household, according to consumer website NerdWallet.com.
"Optimally, personal finance would be taught in both the schools and at home," said Laura Levine, president and CEO of the Jump$tart Coalition for Personal Finance Literacy. "But as a community we are lamenting the adult consumers who have made mistakes and are less financially literate than they wish or ought to be."
Washington D.C.-based Jump$tart has developed national standards for personal financial education for kindergarten through high school. "Teaching in the classroom helps to level the playing field for those kids who don't get it at home," Levine said.
A growing chorus of financial literacy advocates agree.
In the wake of the housing bubble and Great Recession, the movement to make financial education mandatory in primary school has gained momentum.
Thirteen states already require high school students to pass a personal finance class to graduate, but for Nan Morrison, CEO of the Council for Economic Education, that's too little too late.
Lemonade stand education
"We think it should be integrated into education in elementary school," Morrison says. "Playing sports, exercising, and brushing your teeth are good life habits and you start learning them when you are very little. Personal finance is also about establishing good habits."
That's not to say kindergarten kids should be studying spreadsheets or balancing portfolios, in the words of Amy Hayward, co-president of A Squared Entertainment, which helped produce the animated content for billionaire investor Warren Buffett's "Secret Millionaire's Club," which offers saving, earning and investing advice for kids.
"It's about teaching kids the consequences of their financial decisions, which relates to living a healthy and responsible life," Hayward said. "Kids are confronted early on with wanting to buy a video game, or a toy," she added, explaining that these are learning opportunities.
According to Levine, elementary school students can start with basic concepts like trade-offs, price comparisons, costs versus benefits, and risk versus reward. The value of money is another important concept, she says, one that's increasingly lost on the very young. "We watched our parents use money to pay for things when we were growing up, but today we live in a digital age where our children are seeing credit cards and debit cards used instead of cash so we need to explain that money is the unit that backs those cards," she says. "That's no longer readily apparent."
As the students mature, more complex concepts can be introduced, says Levine, from insurance and credit, to compounded interest.
According to the Jump$tart Coalition's national standard benchmarks, fourth grade students should be able to rank personal wants and needs in order of importance, compare product return policies at local retail stores, set measurable short-term financial goals, and explain how limited personal financial resources affect the choices people make.
Personal finance education, however, need not (and should not) replace the coursework already taught in elementary school, notes Morrison. The goal is seamless integration.
"Exposure to personal finance concepts can be gained through children's literature, such as Aesop's Fables, like the classic 'Ant and the Grasshopper' story, which is already used in the classroom," she says. "It should be integrated into the everyday life of the classroom."
Units on nutrition can emphasize choices and trade offs, while math teachers can ask students to chart how they plan to spend their allowance, instead of creating a graph of the percentage of students with brown hair versus blond.
A big question mark
A big question remains: does it work?
Thus far, studies aimed at determining whether financial literacy courses have a positive impact on consumer behavior have been inconclusive. Also, most studies on the efficacy of personal finance classes focus exclusively on adult consumers.
Brigitte Madrian, professor of public policy and corporate management for Harvard University's John F. Kennedy School of Government, supports the introduction of money management skills in elementary school, but stresses that the data simply does not exist to measure its effectiveness. "We don't have a lot of good evidence on how well these programs work. A few studies suggest they aren't particularly effective at influencing future decision making at all. It's a big question mark," Madrian said.
That's partly because bad financial decisions are often rooted in procrastination and inattention, rather than lack of education. "We know that people can learn things in the classroom, but not actually change their behavior," Madrian explained. "The challenge in the classroom is that you can make financial literacy classes mandatory, but you can't cover everything that every student is going to need to know," she added. "It may contribute to making better decisions later on, but we don't know that. It's speculation."
All the more reason to give educators the resources they need to teach money management skills more effectively, and the flexibility to create programs that resonate with their student body, Levine said. "Our standards are not a curriculum. They're a guide to help teachers develop courses and help states set their own standards."
Advocates say teachers stand in a unique position to give tomorrow's consumers and investors the tools they need to make good decisions down the road, whether or not financial education ever becomes mandatory in elementary school classrooms.
"If we can start teaching these financial building blocks earlier, then they will have those habits of thought already in place," Morrison argued. "They may not be worried about their 401(k) when they're just out of college, but they may remember the jelly bean lesson on compounded interest and be more likely to save."