Financial Literacy Is the Missing Piece of the American Dream — Barrons.com

By K. Dane Snowden

The other day, before heading off to school, my seven-year-old daughter wandered into my home office and found my desk covered with papers for an upcoming board meeting. Curious, she climbed into my chair and started flipping through the pages as if she had important decisions to make. Watching her, I wondered what the world will look like when she's sitting across from her first employer.

I believe she can do anything, as most parents do. But belief alone isn't a plan, and a plan is what too many kids never get. That's what America's 250th birthday should be about. We have a chance to decide what we want to be true for the next generation. The American Dream has never been a guarantee. It's the hope that tomorrow can be better than today and that each generation can create more opportunities for the next. I still believe that. The question is whether we're giving people the tools they need to turn that hope into reality. This July 4(th) , we'll hear "life, liberty and the pursuit of happiness" in speeches and ceremonies across the country. Those words capture America's promise. But fulfilling that promise has always required something the founders didn't spell out — financial stability. That kind of stability comes from making informed decisions, getting sound advice and starting early enough to let time work in your favor. We're closer than we've ever been. The question is whether we'll finish what we've started.

Schools have a role. Thirty-nine states now require a personal finance course for high school graduation, up from 35 just four years ago. When Delaware passed its financial literacy graduation requirement last year, lawmakers cited research projecting $116,000 in lifetime economic benefit per student from a single half-credit course.

The states that have acted are already seeing results. Kids are graduating with an understanding of budgeting, debt, compound interest and the difference a few years of early saving can make. But 39 states is not 50. Many students are entering into some of the most consequential financial decisions of their lives — how to handle student loans, whether to start saving, how credit actually works — without a single class on any of it.

That gap has a real cost. It shows up in debt carried longer than necessary, savings never started and families who work hard and still can't seem to get ahead. For the 11 states that do not yet offer these programs, the path is clear and the case is proven. Teaching people how money works is essential. But we also need to be more willing to talk about money. Too many people learn through trial and error, if they learn at all, because finances remain a subject families avoid and people are often uncomfortable discussing.

Advice gap. Many people don't know where to turn and others assume professional guidance isn't for them. When they do seek help, they should know how to identify a professional who is competent, ethical and committed to putting their interests first. More than 109,000 CFP professionals have made that commitment. They work with people at every income level, from families managing debt to people who earn high salaries and still can't figure out why they don't feel financially secure. When I think about what I want for my daughter and every kid in her generation, the answer starts with opportunity. I want her to grow up in a country where parents and teachers talk openly about money management from an early age. I want her high school diploma to mean she knows how to build a budget, avoid a debt trap and start saving before life gets complicated. I want her to know how to find a financial professional she can trust. That's the country I want my daughter to inherit. At 250, it's time we built it. So here's the ask: Every state should make personal finance education a graduation requirement. Governors can lead the way, legislators can pass the law and state boards of education can make it real. We at the CFP Board will do our part, expanding access to competent, ethical financial planners and working to bring financial guidance to people who've never had it. Every kid in this country deserves a real shot at the American dream. That means graduating with the knowledge to build a financial life and knowing where to turn for help when things get complicated. The American dream has always needed a plan behind it. At 250, we know how to build one.

K. Dane Snowden is CEO of the CFP Board, the professional body for Certified Financial Planner professionals in the United States.

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