(State of financial education: Many money problems Americans face could have been avoided if financial literacy was taught earlier in school. That knowledge helps create a foundation for students to build strong money habits early and avoid many mistakes that lead to a lifelong of money struggles. This story is part of a series looking at the current financial education landscape in this country.)
As more states move toward requiring personal finance coursework in their schools, they may want to consider who's going to teach it — and how.
While the curriculum generally follows standards set by financial-literacy organizations, teachers may find themselves instructing a course that they have no existing expertise in. And it's not just about learning the material — they also need training for how to teach it.
"What typically happens is that when a state passes a mandate, there's no 'how' attached to it," said Nan Morrison, president and CEO of the Council for Economic Education. "That's one of the challenges of having a mandate without training."
Additionally, there often is no funding attached to the state legislation that authorizes the personal finance classes.
"These unfunded mandates are common in education in general, but especially in personal finance," said Bill Hensley, president and CEO of the National Endowment for Financial Education.
As the pandemic shines a light on the nation's inequality — via the so-called K-shaped economic recovery — financial literacy advocates are hoping that states will be more compelled to require personal finance coursework for students before they graduate from high school.
Overall, 21 states require it, although no more than six mandate it as a standalone course.
In fact, just 1 in 5 students currently finishes high school with such a course under their belt, according to research from Next Gen Personal Finance, a non-profit geared toward assisting personal finance teachers. In schools that predominantly serve Black and Brown students, that number is 1 in 14.
"If you care about economic stability and mobility for everyone, there's an impact here, but we're not getting it to people who need it the most," Morrison said.
Research shows that students who take personal finance classes are more likely to demonstrate responsible financial behavior. For example, such coursework decreases the likelihood of carrying a credit card balance by 21%, according to the National Endowment for Financial Education.
Generally, the curriculum is based on standards set by groups including the Jump$tart Coalition for Personal Financial Literacy and the Council for Economic Education. The coursework focuses on topics like savings, credit, debt, investing and financial decision-making, among others.
Research out of the University of Wisconsin-Madison suggests that training educators helps improve whether they feel well-qualified to teach personal finance. Among a 2020 survey of teachers — mostly instructors likely to teach such a course — those who said they would feel very confident teaching it reached 70%, up from 9% in 2009.
"This is in part due to the expansion of low-cost publicly available professional development opportunities," the report notes. The share of respondents who had gone through training rose to 54% in 2020 from 9% in 2009.
Also in that time, the number of states that require personal finance courses doubled.
The research also shows different levels of confidence when it comes to specific topics under the personal-finance umbrella, however. While at least 75% of teachers surveyed feel very confident when it comes to teaching about budgeting and debt, less than 50% say the same about investing, taxes, risk and behavioral finance.
While Next Gen can offer teacher training at no cost due to an endowment, not all providers enjoy such funding, said Tim Ranzetta, CEO and co-founder of the nonprofit. And given that the primary mode of delivering the training has been in person, not all educators who could benefit from it have been able to attend conferences or other forums.
However, the pandemic has pushed Next Gen's training online, Ranzetta said. The group has reached 6,000 teachers over the last year, which translates into 130,000 hours of professional development.
"I think there is tremendous opportunity for innovation to drive down the cost," he said. "You can reach a lot more teachers this way, and we've proven we can do it effectively."
Still though, states should recognize the importance of providing funding to make sure teachers can effectively instruct kids, he said.
To that point, 25 states and the District of Columbia have introduced bills in their 2021 legislative sessions to increase access in financial education. These bills range from forming task forces and commissions to developing standards for what should be taught in a course to ensuring that every high school student takes a course prior to graduation, according to Ranzetta.
"It's great to have a [legislative] bill, but that's not enough," Ranzetta said. "Having a highly qualified, confident teacher in the classroom matters, and the only way you can do that is if you put money in the bill and use it to train teachers."
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.