Despite rising salaries, a robust economy, and a highly competitive job market that is forcing some employers to entice new workers with signing bonuses, many Alabamians struggle financially and find themselves living paycheck to paycheck.
A national study conducted last month indicated that 57% of those surveyed would be unable to cover a $1,000 emergency expense with their savings. Even fewer indicated they could pay their living expenses for a month if they lost their primary income source.
Much of the blame goes to the skyrocketing inflation rate under the Biden administration, forcing grocery prices to rise by 20% over the past two years, along with rent increases averaging 13%. But other factors are also at play.
During discussions with business owners across Alabama, several have told me that their employees are “always broke” and do not know how to manage their money effectively. Many workers, according to the employers with whom I spoke, are wholly unfamiliar with the various types of available bank accounts, how to manage debt, the importance of having a good credit score, how to plan for taxes, and other basic financial knowledge.
“If employees are struggling financially when Alabama is experiencing its lowest unemployment, best wages, and greatest economy in history, how are they going to handle it when the inevitable recession finally arrives?” I immediately thought when I heard these concerns.
Since becoming lieutenant governor, I have focused much of my efforts on workforce development and ensuring that high school students graduate with the skills necessary to secure a long-lasting, well-paying job to succeed in the workplace. But we must also make sure they graduate with the basic skills to succeed in life.
That is why I am supporting legislation sponsored by State Rep. Andy Whitt (R-Harvest) that would require all high school students to pass a course focused solely upon financial literacy and money management before securing their diploma. Alabama currently mandates a career preparedness course touching briefly on the topic, but Whitt’s bill recognizes that intensive instruction is needed.
As a community banker and vice chair of the House Financial Services Committee, Whitt is exposed almost daily to evidence that more financial literacy education is needed. To his credit, he is proposing a plan to fill the vacuum.
The bill is carried in the Senate by Sen. Jay Hovey (R - Auburn), who is employed as a mortgage loan officer at AuburnBank. He similarly recognizes the importance of financial literacy through his daily interactions with customers.
Our surrounding southeastern states already have financial literacy course requirements in place. It is time for Alabama to do the same.
Under the provisions of Whitt’s bill, public school students entering ninth grade during the 2024-2025 school year would receive instruction on topics like balancing a checkbook, principles of money management, retail and credit card debt, computing interest rates, types of loans and insurance policies, taxation percentages, investment options, and others. The State Department of Education would be tasked with creating a standardized exam that students would be required to take and pass.
If we mandate that students become financially literate early in life, it will ease their way into adulthood and avoid the fiscal pitfalls that have trapped so many before them. All of us know people who signed up for credit cards while in college or as young adults, going on spending sprees because they considered them “free money,” but were plagued for years afterward by ballooning interest rates, minimum payment struggles, and bad credit scores. Financial literacy education can end that burden before it starts.
Perhaps some students will plan for retirement earlier than usual, while others may open savings or investment accounts to protect or grow their money. Perhaps even more will understand that often the difference between happiness and regret is the ability to manage money wisely.
Financial literacy can also aid the workplace for those who regularly handle money or conduct transactions as part of their job. It can also put an end to living check to check just to survive and get by.
If even a handful of students learn how to manage money responsibly and live less stressful and more successful lives as a result, the course would prove worthwhile, but I am confident that countless students will reap these benefits for years to come.
It is time for Alabama to help our high school students chart a course toward fiscal freedom and financial independence, proving the truth of what founding father Benjamin Franklin once said: “An investment in knowledge pays the best interest.”
Will Ainsworth is the Lt. Gov. of Alabama.
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