Newsom signs law requiring California high-schoolers to take financial literacy class

High school students in California soon will have another graduation requirement to get a diploma: financial literacy.

California Gov. Gavin Newsom signed AB 2927, which requires a semester-long personal finance education course to graduate. The proposed new law requires schools to offer the course by the 2027-28 school year and make it a graduation requirement by 2030-31.

The bill provides $300,00 to a commission of educators to develop a curriculum guide and teaching material for the new course. Teachers with social science, business, math, or home economics credentials would be qualified to teach the course.

"We need to help Californians prepare for their financial futures as early as possible," Newsom said in a statement. 'Saving for the future, making investments, and spending wisely are lifelong skills that young adults need to learn before they start their careers, not after."

With the signing, California becomes the 26th state to require high school students to take a stand-alone, one-semester financial literacy course.

How will students benefit from personal finance education?

Bill author Assemblymember Kevin McCarty, D-Sacramento, wrote the bill because young adults are often "bombarded" with credit card offers and often get into financial trouble because of their lack of knowledge.

"Taking a finance class in high school can help students make smart money decisions that will benefit them throughout their adult life," he said.

A recent report, Investing in Tomorrow: Lifetime Value of Financial Education in High School, found that students taking personal finance courses can save more than $100,000 over a lifetime.

Are high school students financially savvy? Not so much, study finds

A 2022 study from EverFi found that high school juniors surveyed do not understand how credit card debt can quickly accumulate, how credit scores work, or how to read a paycheck.

"The data we’ve collected shows that students need real financial education, and they need it now," Ray Martinez, president and co-founder of EVERFI, said after the 2022 study was published.

In the study, fewer than a third of high school juniors and seniors (32%) reported being prepared to compare financial institutions and select one that best meets their needs. Slightly more students—but less than half (47%)— felt they could choose, open, and manage a savings or checking account.

The survey found even more bleak findings for students preparing to go to college: About a quarter of students (27%) reported being ready to estimate their monthly payments after college. About the same share of students (28%) said that they felt “prepared” or “very prepared” to establish a plan for repaying the loans that they take out to pay for college.