The Importance of Financial Literacy for High School Students

School Bus's in a line
Dr. Greg Filbeck, CFA, FRM, CAIA, CIPM, PRM
Director, Black School of Business
Samuel P. Black III Professor of Finance and Risk Management
Penn State Behrend

The Importance of Financial Literacy for High School Students

Mandating financial education requirements for high school graduation is essential to the financial well-being of its country’s citizens. In the United States, Ramsey Solutions[1](2022) notes that currently 27 states offer a personal finance course, although only 15 require students to take a course to graduate from high school. Gudmunson and Danes[2](2011) point out that high school is the best time to achieve impact with financial literacy due to the patterns developed during this period. Danes[3](1994) notes that family environment influences student approach to receiving personal finance curricula in the classrooms. Since the American Savings Educational Council (2001) finds that parents leave their children’s financial education to the education system, high school is often students’ first exposure to formal personal finance curricula. This exposure is shaped by individual meanings and realities based on exposure (Berger and Luckmann[4], 2011).

The lack of financial knowledge results in suboptimal financial decision-making. Nearly one-third of all fees and charges related to borrowing result from a lack of financial knowledge. As a result, a lack of specific debt literacy leads to poor borrowing decisions and potentially overwhelming debt consequences. Understanding financial concepts are vital to financial behavior; however, having high financial self-esteem and confidence is essential to successful financial decisions. Tang and Baker (2016)[5]create four main variables: financial behavior, self-esteem, objective and subjective financial knowledge, and covariates. Their results indicate a direct and indirect relationship between self-esteem on multiple financial behaviors. As a result, the effect of self-esteem is proven to be statistically significant. Thus self-esteem must be considered a factor in financial behavior. 

Self-esteem is enhanced through training and knowledge acquisition, a primary purpose of our outreach efforts. The Center for Financial Literacy at Penn State Behrend has increased its efforts to understand the level of financial literacy in Pennsylvania high schools by providing pre- and post-testing analysis of the financial literacy program launched by the CFA Society Pittsburgh. The results of a preliminary study (Filbeck and Zhao 2018)[6]showed statistically significant improvement in financial behavior and financial subject knowledge based on an analysis of pre-and post-test results of the program. Subsequent research (Filbeck, Pettner, and Zhao 2020)[7]increased the sample size and added objective knowledge assessment and additional control variables such as parents’ formal years of education and socioeconomic data. The greatest improvements in all four measures of financial literacy were noted among those with the lowest initial scores – women, individuals from underrepresented populations, and those from lower socioeconomic standing.  

In the United States, 45.3 percent or 39.6 million households do not hold any assets in a retirement account. Rhee and Boive (2015)[8]find that 66.2 percent of households in the United States have insufficient retirement wealth. As a portion of the Financial Industry Regulatory Authority’s (FINRA) Financial Capability in the United States 2016 publication, financial literacy among Americans was examined (Lin, Bumcrot, Ulicny, Lusardi, Mottola, Kieffer, and Walsh 2016)[9]. Of all adults surveyed, only 37 percent were able to answer at least four out of five financial literacy questions correctly. Many Americans either have no retirement plan or are not currently financially able to consider retirement. All of us need to work together to ensure that high schools have access to financial literacy training so that they can make better decisions as adults regarding financial-based transactions and retirement.

[1]Ramsey Solutions. 2022. “Which States Require Financial Literacy in High School.” Available at

[2]Gudmunson, Clinton G. and Sharon M. Danes. 2011. “Family Financial Socialization: Theory and Critical Review.” Journal of Family and Economic Issues, 32(4), 644-667.

[3]Danes, Sharon M. 1994. “Parental Perceptions of Children’s Financial Socialization.” Financial Counseling and Planning, 5, 127-146.

[4]Berger, Peter L. and Thomas Luckmann. 2011. The Social Construction of Reality. New York, NY: Open Road Integrated Media.

[5]Tang, N., & Baker, A., 2016. “Self-esteem, financial knowledge and financial behavior.” Journal of Economic Psychology 54, 164–176.

[6] Greg Filbeck and Xin Zhao, 2018, “Financial Literacy: The Effectiveness of High School Outreach.” Journal of Business and Economic Perspectives 65(1), 87-117.

[7] Greg Filbeck, Jason Pettner, and Xin Zhao, 2020, “Financial Literacy: Profiling a Successful High School Outreach Program”. Financial Services Review, forthcoming.

[8] Rhee, N., and Boivie, I. 2015. “The Continuing Retirement Savings Crisis.” Available at 

[9] Lin, J., Bumcrot, C., Ulicny, T., Lusardi, A., Mottola, G., Kieffer, C., & Walsh, G. 2016. “Financial capability in the United States 2016.” Available at

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