Twenty-six states now require students take personal finance classes as California joins effort

More than half of U.S. states now require high school students to receive a financial literacy course before they graduate after Gov. Gavin Newsom signed a bill passed by the California Legislature.

With the passage of California’s law requiring schools to offer a course in personal finance by the 2027-28 school year and requiring the class of 2031 to receive at least one class, a total of 26 states now require students to take a course on how to manage money, according to a nonprofit spearheading efforts to pass such laws.

While students are learning about the cost of living, how to balance their budget and file taxes, a Senate appropriations committee analysis of the legislation says implementing its requirements may cost the state an additional $200 million a year.

“We need to help Californians prepare for their financial futures as early as possible. 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,” Newsom said in a news release last week ahead of signing the legislation.

According to that release, the push for requiring a personal finance course was led by the nonprofit Next Gen Personal Finance (NGPF), which has a goal that by 2030 all high school students nationwide will be required to take a personal finance course.

NGPF shows that in recent years, states have adopted course requirements intended to boost students’ financial literacy, with California’s recent adoption serving as the tipping point in the halfway mark.

The cost to implement the extra course requires extra funds for teachers and the state’s Instructional Quality Commission, according to the Senate Appropriations Committee analysis.

“Assuming a salary range of $100,000 to $150,000 (including benefits) for one credentialed teacher at each of the state’s 1,300 high schools, the Proposition 98 General Fund costs would be $130 million to $195 million each year,” the analysis reads.

“The California Department of Education estimates one-time General Fund costs of $271,000 over a two-year period for the IQC to develop the curriculum guide and resources for the personal finance course,” the analysis also reads.

“This bill would add the completion of a separate, stand-alone one-semester course in personal finance, that is prohibited from being combined with any other course, to the graduation requirements commencing with pupils graduating in the 2030–31 school year, including for pupils enrolled in a charter school,” the legislation reads.

Amendments made to the legislation in the state Senate added that the course will build on existing laws governing mandated topics to be addressed during “Workplace Readiness Week,” which requires students to learn about the benefits of labor unions and the workplace protections they have won.

Those amendments added to the course topics “included in the ‘Workplace Readiness Week’ section of existing law, including the prohibitions against misclassification of employees as independent contractors, child labor, the right to organize a union in the workplace, and the labor movement's role in winning specified protections and benefits.”

The Workplace Readiness Week legislation was passed in the fall of 2023.

Other topics include the basics of bank accounts, budgeting, credit, debt, loans, insurance, taxes, investing, consumer protections, charitable giving and work and schooling options after graduation from high school.

There is a carveout for students who would rather take an economics class instead of personal finance after pushback from the California Council for the Social Studies, which asked the Legislature to amend the current required classes instead of requiring students to take another before graduation.

“While we are supportive of that intent in AB 2927, we are concerned that high schools will be left with a zero-sum game in which they either choose to preserve their single-semester Economic course or sacrifice it to a yet-to-be developed semester-long Personal Finance (PF) course,” the group wrote.

The enrolled version of the bill would not require students to take both.

“The bill would authorize, commencing with pupils graduating in the 2030–31 school year, including for pupils enrolled in a charter school, a pupil who completes a separate, stand-alone one-semester course in personal finance, that is not combined with any other course, to elect to be exempt from the graduation requirement to complete a one-semester course in economics,” it reads.