A new law Gov. Charlie Baker signed last week aims to give Massachusetts students the tools they need to navigate their financial futures, including milestones like buying a home and planning for retirement. The House and Senate on New Year’s Day sent Baker a bill (H 5030) that allows state education officials to establish standards around financial literacy, which schools could incorporate into their existing curricula in subjects like math, business, and social sciences, according to the SHNS.
Sen. Jamie Eldridge, an Acton Democrat who sponsored an original Senate version of the bill, said he’s been filing it since he was first elected about 10 years ago and has learned more about the issue as co-chair of the Financial Services Committee the past two sessions.
“Financial advisers, banks and financial institutions have said that when they interact with young customers that they’re seeing a lot of young people are not fully grasping everything from what credit cards are, compound interests, and just general costs once they’re out of high school and college,” Eldridge told the News Service.
Eldridge said he hopes the new law will encourage more schools to offer financial literacy education, and that young people will be more aware of how to protect themselves from scams and predatory practices.
“There’s a lot of fraud and financial abuses happening out there, and we need to stop that, but I think it would also be helpful for people in general to be more educated about their finances,” he said.
The law says the standards “shall promote an understanding of personal finances,” covering topics like loans, interest, online commerce, renting or buying a home, planning for higher education and for retirement, balancing a checkbook, state and federal taxes, charitable giving, and “the role of banking and financial services.”
The standards would also need to include a component on “evaluating media content, including online content, that relates to personal finance matters.”
Tamara Sobel of the group Media Literacy Now said media is “definitely an influencer” in money-related decisions. “It just makes sense that having critical thinking skills around all media is relevant to financial decision making, whether it is understanding how specific financial products are marketed, or more generally how advertising and entertainment media may influence financial and lifestyle values,” she said.
Sobel said financial literacy skills are “absolutely key for creating a more equal economic playing field.”
According to the financial education coalition MassSaves, which backed the bill, students who have taken a class in personal finance are more likely to behave in financially responsible ways.
The group said 93 percent of those who have taken a such a class save money, 60 percent have a budget and 32 percent have invested money. Among those who have not taken a personal finance class, 84 percent save money, 46 percent have a budget, and 17 percent have invested, according to the coalition.
The Senate passed its financial literacy bill unanimously in March, the same day senators approved a civics education bill that is now also law. The civics bill also includes language around media literacy.
On Dec. 31, the House amended the bill, and both branches took their final votes on it the next day, the final day of the 2017-2018 legislative session. Baker signed it into law on Jan. 10.
Earlier in December, Sen. Diana DiZoglio, who last session served in the House and had sponsored one version of the financial literacy bill in that branch, had said the issue would be one of her top priorities when she moved to the Senate in the new year.
“As a nation, our failure to teach the importance of financial literacy has led to the exploitation of millions of people and triggered a financial crisis a decade ago that we have only recently recovered from as a nation,” she said after Baker signed the law.
DiZoglio, a Methuen Democrat, said the financial and civics education laws together will “ensure students learn real world skills that will benefit them for the rest of their lives and make them more engaged, responsible citizens in our state.”