First, save a $500 emergency fund. Second, get out and stay out of debt. Third, pay cash for your car. Fourth, pay cash for college. Fifth and finally, build wealth and give.
These are the five foundations of personal finance in “Foundations in Personal Finance,” presented by Dave Ramsey. GlenOak High School has recently switched financial literacy curricula to use Ramsey’s course from Junior Achievement’s Financial Literacy.
According to the World Economic Forum, only 48% of American adults are financially literate. This is why, in 2019, Ohio has created a new high school graduation standard that requires all students graduating in 2026 and later to take at least one-half credit of financial literacy while in high school.
This new standard has been deemed necessary by state lawmakers as credit card debt across the country is at an all-time high. More and more Americans have large amounts of loans, for everything from college to cars, according to debt.org. However, many teachers are currently struggling to find the perfect curriculum.
Ramsey is widely regarded as a personal finance guru, with his advice being widely followed across the United States. He has over 20 million listeners each week across multiple streaming platforms.
He preaches staying out of debt, often to an extent that critics claim is unrealistic for the typical American citizen, claiming that you shouldn’t take out student loans, use a credit card or take out a loan for a car. Despite this, his courses have helped many people take control of their own finances.
Teacher Angela Spano is one example of this. She started getting into personal finance by reading his books, listening to his podcast, and following some of his principles, but after getting the basics down, she started doing her own research.
“I think a lot of people that got into personal finance started with Ramsey and then they went down their own rabbit hole [of what they] want to follow,” Spano said. “I think he’s a good person to start with, but once you’ve mastered it, you need to move on from Dave Ramsey.”
GlenOak switched to Ramsey’s curriculum to help students have a firm grasp of how to be financially successful. Last year, financial literacy teacher Rick Talbott taught using the Junior Achievement curriculum. It was very comprehensive and in-depth, but Talbott found it was too complicated for most freshmen, who were having the same issue that many American adults have.
“The content [of JA] was better, but it was over everyone’s heads for the most part,” Talbott said. “It had a lot of looking at your car insurance or your paycheck, which most freshmen don’t have.”
Most students at GlenOak High School take financial literacy as a freshman, since it is the easiest time to fit it in students’ schedules. While this is very practical, it makes it more difficult to find a curriculum that is comprehensive enough to help students understand how to be financially healthy adults without going over their heads.
“I moved to the Ramsey one because it’s geared towards freshmen,” Talbott said.
Talbott feels using a curriculum geared more towards younger students makes the class much more impactful. Financial literacy is a subject matter that many adults still do not have a strong grasp on. According to The Lending Tree, 36.4% of Americans struggle to pay their usual household expenses.
Despite this need, it is debatable whether Ramsey is the best person to teach the basics to young, impressionable individuals. He tells his students to avoid debt and to not have a credit score. While avoiding debt and decisions that would hurt your credit score is useful advice, critics state that it is nearly impossible to avoid these to the extent he preaches.
Because of these criticisms, Talbott has altered how he teaches part of the class.
Credit is a widely used method of paying for things, and it can become very difficult to avoid it entirely. Many apartments will not lease to individuals without a credit score, and car dealerships typically offer very few financing options for those without credit, which can be a large roadblock for many people.
“[In class] we just learned about credit scores. He talks about how he doesn’t have one, and we talk about how everyone has one” Talbott said.
According to the GHS Federal Credit Union, many apartments require a credit score of 650 or higher to consider leasing, and not having a credit score is often seen as the same as having a bad credit score.
Ramsey also tells his followers to avoid taking out any sort of loan, which can be harmful to students who are looking at higher education.
Educationdata.org states that, on average, each student borrows $7,487 per year to pay for school. While this is deemed as a good type of debt, Ramsey doesn’t differentiate between good and bad debt, saying that all debt should be avoided, something that Talbott disagrees with.
“One of the things I [taught in my class] was the cost of college has increased dramatically versus what workers get paid… So it’s easy to say that in my day, I didn’t need loans. Well, if you look since 2000, the cost of college has skyrocketed versus what people get paid,” Talbott said.
While Dave Ramsey’s take on personal finance has its flaws, it is an introduction to personal finance that has helped many people take control of their finances, helping over 8,000 individuals out of debt, according to Ramsey Solutions.
“At the end of the day Dave Ramsey is a great starting point into the world of personal finance. There are tons of great resources out there for anyone who is interested. If you use a few of his principles and are responsible with your credit and spending it is possible for everyone to have a successful financial future,” Spano said.
