In a significant move towards improving financial literacy in California, Governor Gavin Newsom has recently signed a bill into law. The new law is expected to bring about radical changes to the financial education system in the state.
In late June, Assembly Bill 2927 was passed, mandating that high school students in California take a financial literacy course in order to graduate by 2031. As an elective, school districts must offer this course by 2027. California now joins a growing list of over two dozen states that require students to complete a financial literacy class as part of their graduation requirements.
Last month, Newsom stated that it is crucial to assist Californians in planning their financial future early on. He emphasized that individuals must develop essential skills such as saving for the future, making wise investments, and managing their expenses from a young age, rather than waiting until they start their careers.
According to NBC Bay Area, California’s State Superintendent of Education, Tony Thurmond, was one of the primary supporters of the bill during its two-year journey through the state legislature. Thurmond believes that the bill offers an excellent opportunity for more Californians to become productive members of society, providing for themselves and their families.
During an interview with NBC Bay Area, Thurmond expressed his strong support for financial literacy education. He is not alone in his opinion, as a 2022 poll by the National Endowment for Financial Education revealed that 88% of adults support adding financial literacy to the graduation requirements. Tyton Partners, a consulting firm made up of “Global Knowledge Sector experts,” also reported that a financial literacy course could provide a lifetime value of over $127,000.
According to Thurmond, personal finance courses are only accessible to 25% of Californians, whereas the figure stands at 70% for students across the country. He believes that revising the curriculum will enable students to cope better with the challenges of living in a state with one of the highest costs of living in the nation.
According to him, students will receive valuable information on managing their finances, making wise decisions, and affording to live in a high cost of living state and nation. The messaging will equip young people with long-lasting decision-making skills that will ensure their success throughout their lifetime.
With the post-pandemic cost of living skyrocketing beyond the rate of inflation, the introduction of the bill couldn’t be more timely. Since 2020, goods and services have increased by a staggering 20%, and recent housing data indicates that the sale price of homes in the Bay Area is reaching an all-time high. It’s worth noting that San Francisco and San Jose, the two largest metropolitan areas in the Bay Area, consistently rank among the top five cities nationwide in cost of living indexes. Unfortunately, these issues seem to be long-term problems that require urgent attention.
According to Superintendent Thurmond, Next-Gen Personal Finance, a nonprofit organization based in East Palo Alto that focuses on financial literacy, is helping with the implementation of the bill. They are offering grants worth “over a million” dollars to support the professional development of teachers and curriculum creation. In a CNBC op-ed, Tim Ranzetta, one of the organization’s co-founders, expressed his joy at the bill’s passing. He mentioned that he was “elated” at the news.
Ranzetta emphasized that every student in the state, regardless of their economic background or the school they attend, will now have an equal chance to learn essential 21st-century skills such as credit management, budgeting, and comprehending financial options for their future career or college.
Assemblymember Kevin McCarty, who authored and sponsored AB 2927, shares the belief that young people today are often faced with overwhelming credit card offers that can lead to significant debt. He stated in a news release that taking a finance class in high school can equip students with the necessary knowledge to make wise financial decisions that will have a positive impact on their adult lives.