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Financial Advice

Think You Learned Everything About Your Finances?

Financial expert Tim Ranzetta describes the four C’s of financial education.

This week on The Long View, Tim Ranzetta, the co-founder of the nonprofit Next Gen Personal Finance, joins us to talk about his financial and professional education and tools, and the state of financial education in the United States.

Here are a few excerpts of Ranzetta’s conversation with Morningstar’s Christine Benz and Jeff Ptak:

The Four C’s of Financial Education

Ptak: What did you feel was missing in the financial education space when you launched Next Gen Personal Finance? It seems like a lot of different entities have been trying to enact positive change in this area for a long time. So, was there a specific angle you wanted to pursue with your foundation?

Ranzetta: Yeah, I think, when I got started, I was kind of in an experimentation mode where I didn’t know if there was a there there, because there are no shortage. Go online and search for personal finance resources or financial literacy and there’s hundreds, hundreds of them. And so, I had the good fortune, the co-founder of Next Gen is an educator, Jessica Endlich. And so, she joined very early on board. So, I had kind of all these zany, crazy ideas and she was the educator who is like, okay, how do we create something that really can make a difference in a teacher’s life in terms of them delivering the curriculum. And I think over time what we settled on was the four Cs.

And so, the four CS – basically, you start with customizable. So, all of the lessons and activities we created, teachers can just make a copy of it and adapt it as they see fit to meet their students’ needs. So, this was not a workbook, this was not a PDF where you got to teach it the way it is. We recognized every classroom is so different. You might have ELL students in your classroom. You might have honors students. Your ability to kind of adjust the curriculum, that was number one.

Number two is current. There were a lot of workbooks and textbooks out there. The minute you publish the textbook, it’s outdated, because tax tables change, because new financial products, buy now, pay later or commission-free trading. All these things happen so quickly. And so, being able to deliver a curriculum digitally starting with a blank sheet of paper was a huge advantage. So, we could – when the GameStop and meme stock, when that event happened last year, we were ready that we created resources for teachers so that they could learn about it, but then also deliver activities around. So, that was customizable, current.

Comprehensive – we wanted to be the one – I’d tell you, when you start a company, you have a vision. My vision was a one-stop shop, because different organizations did different things when it came to curriculum, but nobody had kind of like the one place. So, when you talk to most teachers, they’d say, oh, I Google. That’s how I find stuff. I want it to be that replace Google and come to So, comprehensive.

And then, the last piece was curated. The internet is a blessing and a curse. It’s a blessing because you have access to all of the world’s information. It’s a curse because you have access to all the world’s information. And so, we really got effective at curating resources that were out there. So, in some cases, we created activities; in other cases, like the Uber game, which was created by – for Financial Times somebody created the game, and we said, oh, that’s a great game. Let’s take it and build an activity around it. So, that was kind of the approach that we took, and we’ve continued to benefit from. That’s what I think has made our offering distinctive and has led to the point where we now have 63,000 teachers reaching 3 million students and most of our growth came through word of mouth, teachers telling teachers.

The Impact of Financial Education

Benz: So, I wanted to get into the why behind teaching kids personal finance concepts in the K-12 setting. Can you talk about what the data say about whether these programs have an impact? Your website lists several behaviors that tend to be associated with someone having taken a personal finance class they’re less likely to carry a credit card balance or take out a predatory loan, for example. Can you discuss kind of the underpinning of why you think it’s so important to do this?

Ranzetta: Yes. So, I think on the research side, I think this story just keeps getting better. So, there is a recent study out from a host of researchers – Kaiser, Lusardi, Menkhoff, and Urban – that was a meta-analysis of 76 randomized experiments. And what the conclusion was that financial education positively impacts almost all financial behaviors, so that’s budgeting, that’s saving, that’s credit and insurance. And so, some of this is content related, right? Like, you need to understand what goes into a credit score so you can behave accordingly. You need to understand technical terms like utilization rate, how much of the credit that you have available to you are you actually using, that has an impact. So, some of it’s that. But a big piece of it is behavioral too. And so, we incorporate a lot of behavioral economics and psychology, because that’s actually the first unit in our semester course is we have to understand what our relationship to money is, what are the money scripts playing in our head, what have we learned that’s been modeled by our parents, guardians, friends, like being able to address that. Because if you – this is not just a content, like, you learn the content, let’s look pre-test, post-test, that’s what really matters. No, it’s not. Ultimately, we have to get to behaviors. And the good news is, we’re starting to see more and more research showing the positive effects.

I would just add one other thing, which is, you kind of – we talk about the research element of it, and I think you’ll also need to incorporate what teachers see in the classroom. And again, it’s anecdotal information, but I can tell you there’s not a teacher out there that doesn’t have dozens of stories about students they see at the grocery store and thank them for helping them start an IRA or teaching them that setting up a LinkedIn profile is how you get jobs in today’s economy. So, there’s kind of the high-level research which says it works. I think if you talk to most educators about what happens in their classroom, I think they would also – they would say, yeah, it’s obvious that it works; let me share with you the stories that I’ve heard.

Measuring Success

Benz: So, how do you measure the success of Next Gen PF’s efforts? Do you do pre-tests and post-tests? How do you look at whether the courses you’re teaching are actually having an impact and actually sinking in?

Ranzetta: Yeah. So, we’re actually – we’re in the process of doing exactly what you said, which is to create an instrument that can be used across the country that will kind of give us those sorts of high-level statistics. Because we want to also make sure the approaches, both in terms of teacher preparation as well as the curriculum itself, is leading to those gains in learning. So, that’s in process. We’re kind of moving through that process as quickly as possible. The short answer is, I don’t think there’s any other better gauge of whether curriculum is working or not than the teacher who is teaching it. And I think the fact that we’ve grown as quickly as we have from 0 to 63,000 teachers with half of those coming through word of mouth and a consistent month in month out 1,000 to 1,500 new teachers, like, clockwork coming onto our platform. I think that’s for me until we are able to show those results, which I’m confident we will with pre and post-tests that that’s a great indicator that we’re creating something that’s working for them.

Can Teenagers Use Financial Information?

Benz: One criticism about teaching financial education, especially investing, to young people is that they may have no immediate opportunity to apply what they’ve learned. If you teach them about stock investing, for example, most high school students do not have the wherewithal to purchase stocks. So, how big of an issue is that in your view, and how does Next Gen Personal Finance try to address it?

Ranzetta: Yeah. So, let’s talk about investing first. I think there has been a tectonic shift in terms of access to financial markets – so, commission-free investing, low minimum, start as low as a dollar, fractional shares. So, I think investing on that specific topic has never been more accessible. Obviously, if you’re under the age of 18, you’ll need to open a custodial account. But our recommendation is these courses are taught kind of at the junior or senior level. So, you’re talking about somebody who might be a year away from being able to open their own account.

We’re also seeing large firms, like Fidelity, where if you have an account at Fidelity, you’re able to set up a youth account for your kids where they can actually make trades, they can make decisions with some oversight from you, but we’re seeing kind of younger and younger folks get engaged in the market. So, I think with investing it actually – the timeframe has gotten – we’re seeing more and more young people engage in the markets because of these tectonic shifts.

The Age of Financial Education

Ptak: What’s the right age to teach personal finance? It seems like high schools are the most likely to offer a personal finance curriculum, but should it come earlier on?

Ranzetta: Yeah. So, we initially focused on high school, and it was just – I felt – I think our team felt this urgency that all of these young people were getting sent off into the wild and were going to be forced to learn through the school of hard knocks. And the other thing about high school, when you think about their life stage, how many events are coming at them fast and furious. Just a few, right? You’re getting access to the family car. Isn’t that a great opportunity to understand how insurance works and reading a policy statement? Or maybe they’re getting their first part-time job. Well, they’re going to have to learn how to complete all of those forms as well as their taxes and reading a pay stuff. Maybe they have a bank account. They’ve opened a bank account. They better understand what the fee structure is. And we know based on research about a third of young people don’t know the difference between a debit card and a credit card. So, it’s an opportunity to teach that.

So, I think the closer you are to making decisions, the more motivated you are to learn. And so, I think high school is an ideal time. Having said that, I think the earlier you can learn these concepts, the better. And so, we have a middle school curriculum also and very quickly have more than 10,000 teachers who are using that curriculum. So, clearly, there’s an appetite. It’s got to be developmentally appropriate, but there’s an appetite to bring these lessons at even a younger age. And if I can make a pitch – we also support a podcast called Million Bazillion which is created by Marketplace. And so, anybody who has young children, this is really intended for an audience 9, 10, 11, 12-year-olds. It’s a podcast really geared to help start those conversations, because it can be difficult for parents to engage with young people and a podcast like Million Bazillion can be a great way to get that conversation started.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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