Study shows need for teacher training in personal finance

June 8, 2010

While 89 percent of K-12 teachers agree that students should either take a financial education course or pass a competency test for personal finance before graduating from high school, relatively few teachers believe they are adequately prepared to teach such topics, according to a study by two University of Wisconsin-Madison researchers.

But to advance their life-skill learning, many teachers said they would welcome more learning opportunities in both financial education subjects and teaching methods, the study found.

UW-Madison's Wendy L. Way, professor in the School of Human Ecology, and Karen Holden, professor of emeritus in UW Madison's La Follette School of Public Affairs and the School of Human Ecology, surveyed more than 1,200 K-12 teachers, students currently enrolled in teacher education programs, and university teacher education faculty to better understand their training and education in personal finance, opinions about the importance of financial education and capacity to teach these topics.

The study, "Teachers' Background & Capacity to Teach Personal Finance," was funded by the National Endowment for Financial Education (NEFE).

Having taken a personal finance course for credit is an important predictor of teaching personal finance, the researchers found. And further, teachers who had taken a college course with financial education-related topics were 50 percent more likely to rate themselves as competent to teach financial literacy.

Yet interestingly, today's prospective teachers are no more likely to have taken a course in financial education than teachers who have completed their degrees many years earlier, the researchers found.

"This study reinforces the need to incorporate personal money management topics into educational opportunities for teachers, whether in undergraduate or graduate curricula for students studying to become teachers, or as post-graduate or in-service courses or workshops," says Ted Beck, president and chief executive officer of the National Endowment for Financial Education. "We have an opportunity to dramatically affect the quality of K-12 financial education by providing teachers with the subject matter expertise they need throughout their careers."

To gain a sense of teachers' perceptions of their own preparedness to teach, survey respondents were asked how competent they felt to teach specific topics included in educational standards such as those identified in 2007 by the Jump$tart Coalition and in the NEFE High School Financial Planning Program®. The study surveyed teachers on six personal finance areas: income and careers, planning and money management, credit and debt, financial responsibility and decision making, saving and investing, and risk management and insurance.

Relatively few teachers reported feeling "very competent" in any of the six topic areas. Teachers felt most competent to teach in the content areas of income and careers, and in planning and money management, but even for these topics fewer than 20 percent reported feeling "very competent."

"Just having a solid background in financial content isn't enough," Way says. "Teachers also need help with financial education pedagogy, such as designing curriculum, assessing learner needs and employing educational strategies."

More than half of the respondents reported needing help in these areas.

"The good news is that there is a small core of teachers who do feel competent to teach personal finance," Way says. "Identifying the factors that built their confidence will help educators understand how to increase the number of teachers in that core."

The study also found that only 37 percent of K-12 teachers had taken a college course offering personal finance content. But results showed that having taken a college course in personal finance is a major predictor of teachers feeling competent to teach personal finance.

More than 70 percent of K-12 teachers indicated they were willing to participate in formal financial education training. Areas for which teachers felt least prepared were risk management and insurance, saving and investment, financial responsibility and decision making, and credit and debt.

Survey respondents indicated they also want help with teaching methods.

"Our research shows that teachers are open to integrating financial education into their curriculum. But they need help with tailoring the content to their discipline," Holden says. "Helping teachers learn how to include financial literacy concepts into other disciplines-such as math, consumer education, or language arts-is a way to expand financial education throughout the curriculum."

Today, 44 states, including Wisconsin, have adopted personal financial education standards or guidelines, according to the Council on Economic Education 2009 Survey of the States.

Given this growth in support for financial education, researchers Way and Holden expected that these educational policies would have some influence on whether teachers had taken or taught a course related to financial education, or felt competent to teach these topic areas.

However, the study found no influence of state standards on whether a teacher had taken a course in personal finance, taught a course or felt competent to teach a course.