When Kentucky state Treasurer Allison Ball and a colleague talked with high school seniors last year about credit cards and other pieces of the personal finance puzzle, something wasn't right.
"We kept using the word 'interest' and we kept getting blank stares," Ball recalled. Finally, she asked the students who knew what interest is. No one did.
"Here they were, about to be adults, two weeks before graduation -- and they had no idea about interest on credit card payments," said Ball, a former bankruptcy attorney. "That's exactly how you get into trouble."
Kentucky is the 44th most financially literate state, according to a WalletHub analysis based on 15 metrics, including the availability of high school financial literacy classes and the share of adults with rainy day funds. And the state has the eighth-highest personal bankruptcy rate, with 345 bankruptcy filings per 100,000 residents. But this year Kentucky launched a two-part initiative to help its residents better live within their means.
Beginning with ninth graders in 2020, Kentucky will require a financial literacy course before high school graduation. And assuming the courts allow its work-for-Medicaid plan to proceed, the state will offer financial literacy instruction to some Medicaid recipients who are required to work.
Kentucky's focus on requiring financial education reflects a budding consensus among policymakers, academics, the finance industry and parents that states need to do more to ensure that students -- and adults -- learn how to manage credit, craft a budget, borrow for large purchases and save for retirement.
Three other states -- Arizona, Iowa and Louisiana -- also added financial literacy course requirements for high school graduation this year, according to the National Conference of State Legislatures.
New Mexico, which already requires a high school personal finance course be offered, will study how to provide financial literacy training to foster care children and help them manage checking and savings accounts. Kansas, which does not require a course, passed a law this year requiring financial assistance for individuals receiving compensation for wrongful convictions.
Until this year, only 17 states required a personal finance course for high school graduation, according to the Council for Economic Education's 2018 Survey of the States.
Deeper in Debt