A man in a polo shirt standing in an empty classroom with book-filled shelves and old computers lining the wall behind him
Maths teacher David Peng believes that education around financial literacy needs to improve © Pascal Perich

This article is the latest part of the FT’s Financial Literacy and Inclusion Campaign

David Peng presses a key on his computer and a “wheel of fortune” spins on the whiteboard at the front of his class, on financial literacy for teenagers. It stops on a painful scenario: “A neighbour’s air conditioner leak has destroyed your computer.”

Some of his students laugh with relief: they had allocated one of 17 plastic beans on the worksheets in front of them to insurance premiums. The rest sigh as they are forced to remove three beans from other items to pay for a new computer, depriving them of planned spending on clothes, concerts or eating out.

Peng’s class at Stuyvesant, a highly competitive state-funded New York high school, is just a short walk from Wall Street. But even these basic lessons in budgeting, saving and borrowing have found a ready audience. And it is one of many US financial literacy initiatives now being supported — with funding and resources — by wealthy entrepreneurs and individual donors.

“This is such an important subject,” says maths teacher Peng. He has found that, from low-income immigrant Americans to the privileged children of CEOs, “no matter what their background, they have very limited knowledge.”

Although many of his students go on to work in finance, “a lot don’t have any courses in personal finance even at college; we try to break the stigma that finances should be private”.

Peng is part of a growing movement calling for better financial literacy education nationwide, to tackle the negative economic consequences of Americans’ lack of pecuniary understanding.

Prof Annamaria Lusardi, an authority on the topic based at Stanford University, says: “If we had to give a grade to the US for adult financial literacy, it would be an ‘F’. In our tests, they only answer half the questions. That’s surprising in the country with the most developed financial markets.”

As in most other countries she studies, Lusardi has found basic arithmetic skills are missing, with many people unable to understand the effects of inflation on their income or to calculate the annual charges on a loan with an interest rate of 2 per cent.

Other gaps reflect increasing financial complexity. “The world is changing so fast,” Lusardi says. “You cannot just use common wisdom or rely on your parents, who never faced cryptocurrency and didn’t have to pay off student loans. It’s different in a country where young people in college start their economic life in debt.”

Among the resources she recommends are materials provided by Next Gen Personal Finance, a non-profit group co-founded by Tim Ranzetta, an entrepreneur whose previous work included analysing executive pay packages for Fortune 500 companies and helping families make better college financing decisions.

A few years ago, he set himself the objective of ensuring that every high school student in the US should take a semester-long personal finance course. Now, Ranzetta’s organisation offers training and networks of support for teachers, and resources including classroom games to engage students. “Finance can be intimidating and can seem exclusive and full of jargon. We need to make it topical and fun,” he says.

He launched Next Gen Personal Finance after volunteering to teach financial literacy at a high school with many low income children, in East Palo Alto, near San Francisco. “I saw both how eager they were to learn, and the ripple effect on their parents who started asking about investing for retirement,” he says. “We get a multigenerational effect.”

However, Ranzetta remains concerned about financial messaging on social media. “Spend a bit of time on YouTube or TikTok, and you’ll see no shortage of get-rich-quick schemes,” he warns. “We’re seeing more and more products sold to younger people, and more than 30 states allow people to gamble online. Yet a third of young people don’t know the difference between a debit and a credit card.”

But he is optimistic about the goal of a semester-long course for every high school student. A survey conducted by Next Gen Personal Finance shows that half of the country’s 50 states — from New Hampshire to Oregon — have now introduced legislation requiring significant standalone lessons on financial literacy in schools. Ten of these states have already fully implemented the measures; the remaining 15 are in the process of doing so.

Some states, including New York, have resisted — arguing that financial literacy is covered by broader educational guidelines, and there is no way to squeeze additional lessons into school timetables. However, New York is now discussing standalone guidance, according to David Anderson, president of Working in Support of Education, a New York non-profit that is funded by wealthy donors and family foundations.

Supporters like these know that, if this education is useful for the children of Wall Street bankers, it must be even more valuable for pupils from poor families.

Andrew Jack is the FT’s global education editor. Follow him on X

This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment

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