Dec. 1—When he explains retirement funds to young adults, Chad Cooper has to get creative.
Cooper, an Albuquerque-based financial adviser, often translates retirement contributions into a language he knows 20-somethings will understand: Contributing $20 per paycheck to a 401(k) is the equivalent of not purchasing three drinks at Starbucks. That money will grow over time into a significant sum.
Still, Cooper's younger clients often feel like they're losing money instead of investing it. Some opt out of contributing to retirement plans. This phenomenon, he said, demonstrates a fundamental misunderstanding of financial concepts — including saving for retirement, investments and budgeting — among young people.
"That's a big deal, and that's something that I see pretty regularly," he said.
Cooper, who serves as president of the National Association of Insurance and Advisors and vice chairman of the African American Greater Albuquerque Chamber of Commerce, told state lawmakers on an economic development committee this week New Mexico should require a one-semester course on financial literacy for high schoolers across the state.
Sen. Moe Maestas, D-Albuquerque, plans to introduce a bill in the upcoming legislative session that would create a financial literacy requirement. The effort follows failed attempts in past sessions to pass similar legislation, which raised concerns among some lawmakers about adding to students' graduation criteria.
The change, Cooper told the Economic Development and Policy Committee on Monday, would curb financial confusion among young people entering the workforce.
Several important questions for people learning to manage their finances remain difficult for many to answer: What is a 401(k), an IRA or a Roth IRA, and how should you save and invest for retirement? How do you create a successful budget? What is an interest rate, and how will it affect your mortgage, car or student loan payments?
A 2021 study by the Life Insurance Marketing and Research Association found only 1 in 8 Americans have a high level of financial literacy, and Cooper said shame associated with that inadequate understanding often stymies searches for financial information.
A required high school course, dedicated to building fundamental understanding of financial systems and processes, could better prepare young people across New Mexico for their financial futures, he argued.
"Having some base level of knowledge, before these kids are in the workforce, could make a significant difference for all of us," Cooper said.
Financial literacy courses are now available at every New Mexico high school. A 2007 law introduced by Maestas, the self-proclaimed "godfather" of high school personal finance, requires financial literacy as an elective. After a statutory change in 2010, a personal finance class also can count toward a student's required four years of math classes.
According to Cooper and Maestas, however, an optional personal finance course is not enough to prepare New Mexico students for the world after graduation. Maestas said in an interview only 11 percent of high school students choose to take a financial literacy course, which leaves the remainder underprepared.
Maestas' solution is to mandate a semester of personal finance for all high school students, a feat he and other legislators failed to accomplish in 2021 and 2022.
There is more than enough content — from tax rates to emergency funds, compound interest and retirement plans — to fill up such a course, Cooper said. Local organizations in the financial and business sector also have offered their services in assisting with curriculum development, guest lectures and other resources for teachers and schools.
"If the state wants to do it, it can be done, and it can be done really well," Cooper said.
Still, Rep. Joy Garratt, D-Albuquerque, questioned Monday whether a new graduation requirement is necessary, particularly as the Legislative Education Study Committee has been working since May to redesign New Mexico's high school graduation requirements.
"It's important that our districts and our schools and our students have flexibility in what is mandated and what is elective," Garratt said.