Financial literacy matters, largely thanks to two major changes in America’s money management system. First, employers moved away from offering employees traditional pensions in favor of defined contribution retirement plans like 401(k)s. Now, employees bear the financial risk from their investment choices.

The second change is even more important: The democratization of credit. Credit once limited to the well-heeled is now offered throughout society. Credit cards are most important, but auto loans, mortgages, student loans and other forms of consumer debt are also easily available. Lenders are adept at promoting the convenience of credit while hiding the true cost of debt.

That’s why it’s worth thinking about the recently released state report card for high schools by Champlain College’s Center for Financial Literacy. High schools in Minnesota earned a B- for teaching personal finance. Utah is the only state to get an A+.

What is Utah doing to get such a high mark? The state requires that all high school students take a half-year course dedicated to personal finance topics. Students must also take an end-of-course assessment examination and teachers must get training in general financial literacy. In Minnesota, personal finance is embedded in an economics course required for graduation. The Champlain center estimates students receive about nine hours of instruction in personal finance.

I’d like to see a greater emphasis on personal finance in high school. It’s so easy for financially naive high school graduates joining the military, heading off to college or landing their first full-time job to borrow too much.

Learning the basics of personal finance is also something of a “head fake,” a catchphrase from a famous lecture by the late Randy Pausch, the Carnegie Mellon computer scientist.

He uses the example of sending our kids out to play football, soccer, swimming or some other activity to illustrate the meaning in the head fake. “We actually don’t want our kids to learn football,” he said. “... we send our kids out to learn much more important things: Teamwork, sportsmanship, perseverance.” A head fake is when it seems we’re learning one thing yet we’re gaining a far more important type of knowledge.

What’s the head fake when it comes to personal finance? The essence of personal finance is figuring out what you value.

Which leads me to my final thought for my last column of 2017: Happy holidays!


Chris Farrell is senior economics contributor, “Marketplace,” commentator, Minnesota Public Radio.