What We Get Wrong About Personal Finance Education

TLDR: You can’t teach personal finance without teaching economics. Don’t let them tell you otherwise.

For years, I have argued that financial literacy is a form of applied economic education, not a replacement for economic education. What concerns me now is the direction states are taking. Today, 39 states require personal finance for graduation, while only 22 require economics. In several cases, the introduction of personal finance has encouraged the replacement of economics altogether.

States are teaching personal finance at the expense of economics education.

Interest in Personal Finance

The push for financial education started during the Great Recession. When President Bush established the Advisory Council on Financial Literacy. The goals were:

to expand Americans' access to financial services, increase financial education for youth and adults, and promote research to measure the nation's level of financial literacy.

The premise is that the Great Recession would have been less severe had consumers been better informed. Since the Consumer Financial Protection Bureau was established, many state legislatures have begun the push for financial literacy education at the K-12 level. These initatives are supported through advocacy by organizations like Next Gen Personal Finance with Mission 2030:

By 2030, all U.S. high schoolers will take at least one-semester course in Personal Finance before graduation.

Over the past 15 years, I have watched more states introduce unfunded mandates to teach personal finance. As that list grows, the number of states requiring economic education has decreased. In essence, we have substituted a broader understanding of economics for a more specific, applied version. But there is an even bigger problem with how we teach personal finance.

Personal Finance Matters

Personal finance matters. Students should learn budgeting, credit, saving, investing, taxes, and borrowing. But when we teach only the practical side of finance without emphasizing economic understanding, we create students who can follow rules without understanding the system those rules were built for.

Economics provides that system. It helps students understand how inflation shapes purchasing power, how labor markets affect wages and opportunity, how fiscal and monetary policy influence borrowing and saving, and how behavioral biases affect decision-making. Without that foundation, financial advice becomes a checklist rather than a framework.

And that is my problem with financial education today.

Why Economics is the Foundation for Financial Literacy

When we teach rules without explaining why they exist, we don’t create confident decision-makers; we create financially anxious individuals. People who feel like they are always behind. People who follow advice but don’t feel in control. People who experience the pressure to “do the right things” without understanding how their actions connect to the broader economy or their own long-term success.

That lack of understanding creates a sense of disempowerment. Individuals don’t see how they are participating in the economy; they only see whether they are keeping up with the rules. And when conditions change, as they always do, they are left without the tools to adapt, often feeling helpless.

In my work with students, I try to shift them away from a checklist mindset and toward a deeper way of seeing the world, one where they can anticipate change, interpret economic signals, and make decisions with confidence before problems arise.

I have worked with states to build financial and economic literacy standards, served on the Kentucky Financial Empowerment Commission, and collaborated with central banks in different countries and the Federal Reserve on financial literacy curricula. Across all of that work, I’ve seen the same tension: the push for simplicity in personal finance is strong. I understand why—people are anxious and want clarity.

But following rules without understanding is fragile, and that is the opposite of what we are trying to create. If we truly want to equip people to navigate their financial lives, we cannot stop at telling them what to do. We have to teach them why it works, when it fails, and how to adapt when conditions change. That kind of durable understanding comes from economic thinking. It requires grappling with how markets behave, how policy shapes outcomes, how behavioral biases influence decisions, and how the broader economy evolves.

We should teach personal finance. But we should teach it through economics—not instead of it. April is financial literacy month. Let’s advocate for a more informed consumer who understands their economy and how it influences their own financial journey. Understand the system to understand the rules.

Here is a Wall Street Journal article that influenced this post What’s Cool in High School? Personal Finance