Econ and Personal Finance: Complements Not Substitutes – Federal Reserve Bank of St. Louis

Personal finance education is important. Everyone agrees that managing personal finances is an important life skill that, used properly, can result in a more comfortable life and avoid much grief. To that end, there has been a national effort to mandate personal finance education in every state. In 1998, only 14 states required personal finance standards to be implemented within their schools’ curriculums, according to the “Survey of the States (PDF)” report. As of 2022, that number had risen to 40, according to the biennial survey by the Council for Economic Education.

But there is a risk associated with these mandates. With a finite number of hours in a school schedule and many subjects to teach, administrators, teachers and curriculum directors must make sacrifices when they allocate a scarce education resource (classroom time). As a result, administrators too often see economics and personal finance as substitutes and drop time spent on econ; that is, mandating personal finance pushes out economics instruction.

In reality, the subjects are not substitutes, and we shouldn’t sacrifice economics for personal finance. Economic reasoning can be used to make decisions in all areas of life, but especially when making personal finance decisions. In fact, personal finance can be viewed as the application of the economic way of thinking to everyday decisions. If anything, economics and personal finance are complements, not substitutes.

Economics Is a Core Subject in Social Studies

Economics is one of the core disciplines in social studies. Economics standards are part of the College, Career, and Civic Life (C3) Framework developed by 20 states (five of the states are part of the Federal Reserve Bank of St. Louis’ district) and published by the National Council for the Social Studies (NCSS).
NCSS and its membership believe that social studies, including economics, prepares students for their postsecondary futures. This includes “the disciplinary practices and literacies needed for college-level work in social studies academic courses, and the critical thinking, problem solving, and collaborative skills needed for the workplace,” according to a revised NCSS position statement published in 2016.

“The National Council for the Social Studies reaffirms that an excellent education in social studies is essential to civic competence and the maintenance and enhancement of a free and democratic society,” the statement says.

The economic way of thinking—applying informed decision-making and cost-benefit analysis and recognizing opportunity cost—is at the core of the economics standards. This content is applicable to decisions students will make as consumers, employees, employers, savers, investors and citizens.

Economics Shows the Big Picture beyond Personal Finance



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