In a national survey, only 33 percent of adults over the age of 50 could correctly answer three questions testing basic knowledge of interest rates, inflation and financial markets. And despite the widespread advertisement and usage of credit cards by young adults, only 48 percent of high school seniors know that paying only the minimum balance each month will result in higher finance charges than paying the full account balance. This data underscores what Southern has found as it works to create economic opportunities and improve net worth. Households with low levels of financial literacy tend to borrow at high interest rates, acquire few assets, and not plan for retirement. Further, lack of financial knowledge is especially acute among young adults. This lack of financial knowledge is often tied to financial insecurity, and often stressful situations in which families do not have enough money to meet daily expenses and/or plan for the future. At Southern, we believe this is a problem, with a very reasonable public policy solution.

A growing body of research has revealed that financial education in schools can have a significant impact on encouraging healthy financial behaviors later in life. For example, college students from states that require a mandatory financial education course as a condition of high school graduation are more likely to create and adhere to a budget and less likely to engage in risky credit behaviors. Requiring financial education to be taught in high school is important as there is a strong correlation between high levels of educational attainment and increased financial market participation and decreased chances for bankruptcy, foreclosure, or loan default. Further, it is greater general education that drives changes in savings or investment behavior, rather than increased labor earnings.

In Arkansas, the percentage of financially insecure households is higher than the national rate. Arkansans have a very low savings rate – more than half (51.9 percent) of Arkansas households live in liquid asset poverty, meaning they cannot subsist at the poverty level for three months in the absence of income. In addition, over a quarter (28.1 percent) of Arkansas households are classified as underbanked, signifying the use of high-cost credit from service providers outside the financial mainstream. There is good news for the Natural State, however.  Arkansas currently has content standards for high school personal finance courses, but the bad news is that the state does not require students to take a personal finance course.

Presently, twenty-eight states in the U.S. have implemented personal finance courses in their high school curricula, including bordering states Missouri and Texas.  In the 2013 Arkansas Legislative Session, Rep. Duncan Baird introduced a bill advocating for economic literacy and personal finance education in Arkansas public schools. The bill died, but it did not contain an implementation plan for high school personal finance education. For the 2015 Arkansas Legislative Session, Arkansas policymakers must look at the benefits of programs that increase financial literacy as a means to improving financial decision-making. The more Arkansans that are self-sufficient and financially stable, the less of a need for public benefit and income support programs.

Providing a basic financial foundation for high school students is imperative for their future financial success and stability. Arkansans need to be well-equipped to make informed financial decisions for themselves and their families to achieve economic security. As a Community Development Financial Institution (CDFI), Southern is committed to continuing financial education and improving financial stability through our personalized credit counseling and group financial education programs. We invite you to learn more about our efforts to create economic opportunities for people in rural communities by contacting Meredith Covington, Policy & Communications Manager, at

Harnisch, T. (2010). Boosting financial literacy in America: A role for state colleges and universities. Perspectives. American Association of State Colleges and Universities. Available at

Jump$tart Coalition for Personal Finance Literacy. (2008). 2008 Survey for personal finance literacy among students. Available

Cole, S., & Shastry, G.K. (2010). Is high school the right time to teach savings behavior? The effect of financial education and mathematics courses on savings. Department of Economics, Wellesley College. Available at

Gutter, M. (2009). Financial capability of college students from states with varying financial education policies. National Endowment for Financial Education. Available at

Cole, S., Paulson, A., & Shastry, G.K. (2013). Smart money? The effect of education on financial outcomes. Harvard Business School. Available at

CFED. (2013). Assets and Opportunity Scorecard. Available at

CFED. (2012). Financial education in schools. Available at

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