In January 2021, GameStop stock rose 2000%. In June, AMC rose 600%. In November, Bitcoin reached an all-time high above $64,000.

By December it collapsed. About 30% of Americans bought into a viral meme stock in January, and the media quickly portrayed Wall Street vs. Main Street as a David vs. Goliath showdown. We blamed and demanded control. The Citadel became public enemy number one. Robinhood was fined $65 million by FINRA and a few months later, a record $70 million by the SEC. Between the headlines, we fail to examine this frenzy as a symptom of a wider problem.

2021 showed us: If we don’t teach people financial literacy, they won’t suddenly stop investing. They will do it themselves, and the vast majority will lose money. They will invest less frequently, with less diversification, and in more speculative, get-rich-quick, opportunities.

Instead of applying financial logic, we’ll apply logic from Reddit; Instead of technical analysis, we will analyze the tweets of financial influencers We will invest in crypto because of the star-studded FTX Superbowl commercial, and the cost of financial illiteracy will rise.

Most Americans don’t understand money

About half of Americans are a $400 parking ticket away from the poverty line. That number alone is scary, but the reality is horrifying when the National Financial Educators Council’s 2022 survey showed that the average self-reported cost of financial literacy was $1,819.

When half of US workers earn less than $35,000 per year, how many of them are stuck in poverty because of their own financial mistakes?

Clearly, we have an educational problem. 32% of teenagers still don’t know the difference between a credit card and a debit card, and 11% of Americans with bank accounts will pay overdraft fees in 2021. Without national standards and increased funding for formal financial education, we are teaching financial literacy through financial destruction: weakening the ability of families to build generational wealth and threatening financial crises.

The study concluded that more than one-third of US wealth inequality can be attributed to differences in financial knowledge; Perhaps if we gave people a more informed financial perspective, we would be better equipped to hold public institutions accountable. Or perhaps the system is working as intended: keeping people in the dark about the money so they don’t question public school budgets ballooning to show little in terms of results and achievement.

Financial education is a proven investment we’re not making

Individuals with higher financial literacy scores are more likely to plan, save, invest in stocks, and accumulate more wealth. They have been shown to be less likely to have credit card debt and more likely to make full payments each month. They refinance their mortgages on time, tend not to borrow against their 401(k) plans, and are less likely to use high-cost borrowing methods.

Despite evidence that financial education can produce transformative results, nearly half of students nationwide still lack access to formal financial education. As of 2021, 75% of teens report learning about personal finance from their parents. 52% of teenagers learn from school and 42% from social media.

Social media is not an effective substitute for formal financial education programs; Parents don’t have to make up the gap left by taxpayer-funded schools. If money makes the world go round, maybe schools should teach our kids about it?

Instead, financial literacy has become a giant, generational game of telephone; If a child doesn’t learn about budgeting, saving, credit and investing from their parents, they never will. Financial literacy has become a double-edged sword for generational wealth: it benefits those who have it and hurts those without it.

While 75% of teens lack confidence in their knowledge of personal finance, 73% say they want more personal finance education in 2021. An even greater number (86%) of teenagers were interested in investing.

They are already involved in the topic. Now our job is to harness this engagement, promoting digital, real-world learning that meets them where they already are – their smartphones – to create learning outcomes that change the status quo.

We are improving state by state, but not fast enough

Unfortunately, only 23 US states will require high school students to take a personal finance course for graduation until 2022. 25 states require students to enroll in economics courses to graduate, but even many of these programs would benefit from making financial literacy more relevant, relevant, and integrated into courses.

At Rapunzl, we provide a gamified financial literacy platform where students simulate real-time stock and crypto portfolios before entering scholarship competitions funded by financial institutions, but we are only one part of a broader solution. Rapunzl provides an educator portal for middle school math and financial education with a rigorous and comprehensive financial education curriculum, but we cannot successfully address this crisis at the scale necessary without more public-private partnerships with public funding.

Each of our states requires a full-semester, financial education course for high school graduates and should include financial literacy components in middle school and earlier. With wide gaps in math achievement across the country, financial literacy offers the perfect opportunity to provide relevant, relevant, real-world learning to students because kids love money, and what better project-based learning activity than managing an investment portfolio?

Making financial education cross-disciplinary means we need to provide teachers with the training and resources they need to effectively teach financial literacy. We need to solve the chicken-egg problem: How do we teach financial literacy when we haven’t taught it to our teachers?

Anyone who has spent time in a classroom can tell you that a good curriculum is as good as the teacher who teaches it. We could not believe that financial illiteracy was a new problem or that it exclusively affected the younger generation. After teaching in hundreds of high schools across the country, I can attest that the questions we get from teachers are the same as the students, because our teachers have never received formal financial education.

We need to cope with financial illiteracy and feel comfortable talking about money. A solution requires us to put aside our egos, admit what we know works and what doesn’t, and make sure we are accountable to all education groups, from microschools to homeschoolers to charter schools and public school districts.

The federal government must step in

Beyond state initiatives, the federal government must begin taking financial education seriously. We should enact proactive policies that focus on wealth creation and invest heavily in teacher training because our teachers should understand pensions before teaching students about retirement. We should fast-track approval for digital learning tools that help educators because they have the greatest opportunity to provide truly equitable access to all students, regardless of zip code.

Policymakers should encourage Americans to adopt healthy financial habits at an early age. We should provide financial incentives for parents to invest in their child’s financial future. Federal funds should pursue effective programs and expand their impact at scale. We should tie this funding to adopting personal finance requirements in high schools, which should be an overwhelming bipartisan issue.

Even minimal funding can have compounding effects using networks of existing programs that have proven their effectiveness in the classroom. Rapunzl has distributed over $300,000 in scholarships and impacted nearly 75,000 students over 5 years. What scale can we achieve with a $1 million scholarship a school year? How many students would be affected if every school in the country were required to teach personal finance?

Any solution involving the federal government is challenging; However, we all benefit from more economically engaged citizens; And we must act now.

Financial literacy can and should be woven into a student’s learning because it is critical to creating informed citizens. You cannot read the news without understanding financial markets because the world’s largest stakeholders are formulating policy and making business decisions based on economic factors. By providing students with a financial lens to view the world, we can help them avoid common financial mistakes and harness the power of financial markets to help build generational wealth.

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