A national study conducted just last month indicated that 57 percent of those surveyed said they would be unable to cover a $1,000 emergency expense with their savings and even fewer indicated they could pay their living expenses for a month if they lost their primary income source.
The Biden administration’s skyrocketing inflation rate that has forced grocery prices to rise by 20 percent over the past two years along with rent increases that average 13 percent shoulders much of the blame, but other factors are at play.
During my discussions with business owners across Alabama, several have told me that their employees are “always broke” and do not know how to manage their money effectively.
Many workers, according to the employers with whom I spoke, are wholly unfamiliar with the various types of bank accounts that are available, how to manage debt, the importance of having a good credit score, how to plan for taxes, and other basic financial knowledge.
My immediate thought upon hearing these concerns was, “If employees are struggling financially when Alabama is experiencing its lowest unemployment, best wages, and greatest economy in history, how are they going to handle it when the inevitable recession finally arrives?”
Since becoming lieutenant governor, I have focused much of my efforts on workforce development and ensuring that high schools students graduate with the skills necessary to secure a long-lasting, well-paying job and succeed in the workplace.
But we must also make sure that they graduate with the basic skills necessary to succeed in life.
That is why I am voicing my support for legislation being sponsored by State Rep. Andy Whitt (R-Harvest) that would require all high school students to pass a course focused solely upon financial literacy and money management before securing their diploma. Alabama currently mandates a career preparedness course that touches briefly upon the topic, but Rep. Whitt’s bill recognizes that intensive instruction is needed.
As a community banker and vice chair of the House Financial Services Committee, Rep. Whitt is exposed on an almost daily basis to firsthand evidence that more financial literacy education is needed, and he, to his credit, is proposing a plan to fill the vacuum.
The bill is being carried in the Senate by Sen. Jay Hovey (R-Auburn), who is employed as a mortgage loan officer at AuburnBank and similarly recognizes the importance of financial literacy in his daily interactions with customers.
Each of our surrounding Southeastern states already has a financial literacy course requirement in place, and it is time for Alabama to do the same.
Under the provisions of Rep. Whitt’s bill, public school students entering ninth grade during the 2024-25 school year would receive instruction on topics like balancing a checkbook, principles of money management, retail and credit card debt, computing interest rates, types of loans and insurance policies, taxation percentages, investment options, and others.
The State Department of Education would also be tasked with creating a standardized exam that students would be required to take and pass.
If we mandate that students become financially literate early in life, it will ease their way into adulthood and avoid the fiscal pitfalls that have trapped so many individuals before them.
All of us know someone who signed up for credit cards while in college or as young adults and went on spending sprees because they considered them “free money” but were plagued for years afterward by ballooning interest rates, minimum payment struggles, and bad credit scores as a result. Financial literacy education can end that burden before it starts.
Perhaps some students will begin planning for retirement earlier than usual, others may open savings or investment accounts to protect or grow their money, and even more will come to understand that often the difference between happiness and regret is the ability to manage money wisely.
Financial literacy can also aid in the workplace for those who regularly handle money or conduct transactions as part of their job, and it can put an end to living check to check just to survive and get by.
If even a handful of students learn how to manage money responsibility and live less stressful and more successful lives as a result, the course would prove worthwhile, but I am confident that countless students will reap these benefits for many years to come.
It is time to for Alabama to help our high school students chart a course toward fiscal freedom and financial independence and prove true the words of founding father Benjamin Franklin, who once said, “An investment in knowledge pays the best interest.”