At least 15 states have joined the growing movement to make financial literacy a requirement for high school graduation.
Utah became the first to require a half-credit financial literacy class as a graduation mandate in 2004. Today, eight states require a stand-alone course that provides students with an understanding of personal finance and skills to make good financial decisions. In the coming year or so, financial literacy requirements will go into effect in seven more states: Florida, Georgia, Michigan, Nebraska, Ohio, Rhode Island and South Carolina.
Experts widely agree that financial literacy should be taught in schools, but the way many states are implementing it has raised concerns. Creating an additional obstacle for students to reach graduation is problematic, given existing disparities in graduation rates, some experts say. On top of that, the curriculum that schools are providing often doesn’t reflect Black experiences.
While the curricula vary across classrooms, common themes in financial literacy courses include budgeting and saving, credit scores, banking and investment accounts, insurance policies, loans and debt, wealth building, and college planning. In some states, the lessons can be incorporated into other courses, fulfilled as a half-credit in math or arts, or completed through a career and technical program (CTE).
But the practical lessons introduced in the courses don’t address the additional challenges Black youth may face to acquire wealth and homeownership or the role of structural racism has played in financial industries, said Rahkim Sabree, author of Financially Irresponsible and a certified financial education instructor.
“As with every type of instruction, there needs to be some cultural relevance to it,” said Ivory Toldson, director of education innovation and research at the NAACP. “Nothing is race neutral in this country, so we can’t look at financial literacy as something that’s colorblind.”
Read more: The College Board’s Race Problem
Black people for years have sounded the alarm about the need for more holistic financial education to address the racial wealth gap. The median net worth of Black families was about $24,000 in 2019, compared with $188,000 for white families. Conversely, the poverty rate for Black people was nearly 20% in 2021, compared with just 10% for white people.
The factors contributing to these disparities go back generations, creating a cycle of disadvantage that is evident across society. Black Americans are less likely to be approved for credit than white and Asian Americans, regardless of income level. For Black youth, their credit scores are more likely to decline as they age.
Black Americans also are more likely to be unbanked or underbanked, meaning they have limited access to the benefits of investment in a financial institution, according to a 2021 report by the Federal Reserve System. Across income levels, they are less likely to have access to credit cards, personal checking, or savings accounts, which can accrue value through interest. Black neighborhoods also are disproportionately targeted by payday loans, pawn shops, or check cashing places, risky financial practices that can be predatory.
Banks’ long history of discriminatory practices, combined with inequitable access to affordable financial services and wealth-building opportunities, has caused Black children to typically start with a wealth disadvantage that persists throughout their lives. Black children growing up with parents in the middle 20% of the nation’s wealth distribution are more likely to move down the wealth ladder than their white counterparts. About 39% of those Black children will fall into the bottom fifth of wealth distribution, compared with 16% of white children.
Sabree said Black children’s education needs to go beyond generalized education on finances. Discussion of trauma around finances and therapy should be prioritized, especially for young Black men who are affected by higher rates of premature death.
“You can tell [young Black people] you should be planning for retirement, but they don’t believe they’ll even live half as long as it may take for you to benefit from retirement,” Sabree said. “That’s a conversation that needs to be had.”
Building Black wealth
Black children — more likely to live in poverty and in economically disadvantaged communities — stand to benefit the most from financial literacy education. But despite states’ growing adoption of the courses, Black youth and students in rural areas are less likely to attend a school that requires a personal finance education, according to Next Gen Personal Finance.
That financial literacy education should be available without threatening students’ ability to graduate, Toldson said. And the instruction shouldn’t just focus on the struggles to survive — it should include the history of Black people financially thriving, using examples like Black Wall Street, Beale Street, and Madam C.J. Walker, he said.
“We can be honest about what happened to a lot of those systems, the racism that happened, but also let them know that there are some opportunities that we have today that they didn’t have back then,” Toldson said. “We come from this history of entrepreneurship, and we don’t have to look outside of our race for excellence.”
This is why Virginia-based attorney Kevon Chisolm focused on teaching from an Afro-centric perspective as a tool for empowerment in his Junior Wallstreeters program, which focuses on financial education for underserved youth.
“One of the most shocking things people don’t know is history before slavery. The students had no idea of the greatness of Africa, and that really concerned me,” Chisolm said of financial wealth on the continent. “It makes us feel like we don’t have a place and we never made a contribution to this world. This is one of their favorite parts of the camps.”
The program, which he leads in partnership with his 14-year-old son Kamari, hosts students virtually in the summer for two weeks to learn about financial literacy and investing. At the end of the program, participants can join the alumni group, where students meet once a month for a year to continue learning about topics such as cryptocurrency, real estate, and Black history.
They have conversations about the landscape of their communities, too, Chisolm said, so kids can learn about Black businesses and developers, as well as payday lenders and the ways Black communities are targeted.
“We ask kids of certain [socioeconomic] backgrounds, ‘What if your community has a pawn shop? A payday loan or check cashing place? Why are businesses leaving your community?” Chisholm said. “We teach the kids about investment projects and how they can work together. You don’t have to live in what you’re accustomed to. … You don’t like the stores or housing? You can come together as a group, pull your money together and make change.”
Opening the conversation
Sharita Humphrey, a financial literacy and business coach based in Houston, said Black communities have to overcome the mindset that it’s “taboo to talk about money in the Black household.” Arguments about money are the second-leading cause of divorce, and high levels of debt and lack of community are two major causes for stress and anxiety in household finances, according to a study by Ramsey Solutions.
“We can talk about everything, but when it comes to money and what’s really happening in your financial life, we will put it away and lock it in a safety box,” Humphrey said. “We just don’t want people to know.”
Conversations can be hindered when people are ashamed of their debt or financial situations, Humphrey said. When they’re focused on paying bills, it prevents them from properly managing money or creating a wealth plan, she said. In her coaching programs, Humphrey teaches how to have a healthy mindset around money for this reason.
“Wealth is so far from us in the Black community, and we don’t talk about that, either,” she said. “We’ve lost our financial dignity, and I help them restore that by shifting their mindset, modifying their money behavior, and helping them to become the trailblazers in their family, so the financial loss will stop with them.”
There have been larger efforts to normalize these conversations by Black entrepreneurs and podcasters such as Troy Millings and Rashad Bilal with the Earn Your Leisure podcast. Celebrities including rapper 21 Savage, all-star NBA player Chris Paul, actress Marsai Martin, and hip-hop mogul Jay Z have all created financial literacy classes or programs for youth. In December, rapper Saweetie became the latest, launching a six-week financial literacy course for youth ages 7 and older.
Closing the racial gap in educational resources, homeownership, and wealth could improve the well-being for generations of Black families by helping “to reduce the exposure to economic hardship that Black [people] face and improve family members’ ability to provide help to one another,” according to the Center for Public Information on Population Research.
But, the education must extend beyond classrooms and to the dinner table, Humphrey said.
“We need to make sure it’s not just the students having the conversations surrounding money and credit,” she said, “but making sure that … we are engaging the family in its entirety.”