The roots of financial literacy
Why don’t all schools teach financial literacy?
It’s a question I hear all the time. And one that makes sense to ask, given that this subject has a direct impact on day-to-day living yet is basically ignored in the K–12 curriculum of the majority of states.
It wasn’t always this way. Throughout the first half of the 20th century, financial education was taught in schools, with a particular emphasis on teaching girls.
The history dates back to around the time of World War I, when American women began attending college and participating in the workforce in then-record numbers. Of course, that didn’t mean they were absolved of their domestic duties; they just had less time to perform them, and so they needed to economize in the home. In an effort to do it all, and do it faster, they turned to the popular science of the day, in particular the “Efficiency Movement.” In essence, how could Henry Ford’s recently created approach to assembly lines be applied to housework?
Home economists, including chemists, engineers, and psychologists, ran tests and issued reports. If you’re picturing researchers in lab coats determining the optimal distance between the washtub and the crib, you aren’t far off the mark. At the same time, activists like Charlotte Perkins Gilman (you may know her short story “The Yellow Wallpaper”) were arguing that for women to be on the same financial footing with men, they needed to learn money basics like budgeting and saving.
As Americans began to buy rather than DIY many household goods, women, as the ones running the household, were tasked with being smart shoppers. Financial literacy warriors like Helen Canon emphasized resisting the temptations of consumerism. Her 1935 home economics courses at Cornell University included Problems in Consumer Buying and Planning Expenditures on the Basis of Individual Goals and Standards of Living.
“The idea was radical because it posited women as educated money managers rather than feather-brained creatures of impulse,” said Megan Elias, author of Stir It Up: Home Economics in American Culture (University of Pennsylvania Press, 2010). “They glorified thrift and what we’d now call DIY because it empowered people to resist the snares of advertising and consumerism.”
In schools across the country, girls were taking home economics classes, aka home ec. Alongside lessons on how to darn a sock and where to put the salad fork, girls were being taught basic bookkeeping, budgeting, and check writing.
In the post-WWII era, as women went from Rosie the Riveters to housewives cooking Rice-A-Roni, home ec class became less focused on economic independence for women. In the cultural upheaval of the 1960s and ’70s, disparities between the sexes—like the fact that women weren’t allowed to get a credit card in their own name until 1974—became a big part of the public debate. Home economics curricula appeared out of step and even sexist, leading schools to cut these classes. In a classic case of throwing the baby out with the bathwater, financial education got shown the door, too. It wouldn’t stage a comeback for another 25 years.
But in the mid-’90s, interest in teaching financial literacy resurged. Congress passed the Financial Literacy and Education Improvement Act in 2003, setting up a commission tasked with making a plan for raising financial literacy nationwide. Today, 24 states require some form of personal finance instruction for high school students, and momentum is growing.
Not everyone is a fan of this recent push to get financial education into the classroom. And I get it. Foisting the burden onto individuals to navigate overly complicated insurance contracts, mortgages, and lease agreements is unfair. We need agencies like a strong Consumer Financial Protection Bureau, for instance, to help consumers make sense of the complex financial landscape.
That said, I believe financial literacy is necessary. And there is evidence that when it is taught well, there are payoffs for students down the road. One study conducted in Georgia and Texas found that students who were taught financial basics by teachers who were given training and a meaningful curriculum showed improved credit scores and lower default rates. That’s a lesson that’ll last a lifetime.