Financial Literacy Standards

Knowledge and skills. 

(1) Economics. The student understands the fundamental concepts of economics. The student is expected to: 

(A) analyze how the concepts of scarcity, choice, and opportunity costs apply to decision making; 

(B) interpret a production-possibilities curve and apply the concepts of scarcity, choice, and opportunity costs; 

(C) explain how the production-possibilities curve represents cost-benefit decision making; 

(D) use the circular flow model to identify how households, firms, and governments interact in both resource markets and product markets; 

(E) evaluate how prices and quantities are determined through supply and demand; 

(F) interpret a supply-and-demand graph, including equilibrium point, surpluses, and shortages; 

(G) analyze how non-price determinants of supply and demand affect equilibrium price and equilibrium quantity; and 

(H) explain how supply and demand exist in both resource and product markets. 

(2) Economics. The student understands that macroeconomic issues and policies have an impact on personal finance. The student is expected to: 

(A) identify types of progressive and regressive taxes at the local, state, and national levels and explain the economic importance of each; 

(B) examine and evaluate the reasons for federal income taxation, Social Security taxation, Medicaid taxation, and Medicare taxation, including earnings limitations as applicable; 

(C) explain how all economic systems are mixed and exist on a spectrum between pure market and pure command systems; 

(D) explain the benefits of the U.S. free enterprise system, including private property and incentives; 

(E) discuss the importance of full employment, price stability, and economic growth in achieving the macroeconomic goals of the United States; 

(F) explain the impact of fiscal policies enacted by government decisions on interest rates, inflation, and unemployment; and 

(G) explain the impact of monetary policies enacted by the Federal Reserve System on interest rates, inflation, and unemployment. 

(3) Personal financial literacy--investing in education and skills. The student recognizes the costs and benefits of various types of postsecondary education and training throughout the student's lifetime. The student is expected to: 

(A) analyze the relationship between education and training and earnings throughout the student's lifetime; 

(B) investigate and evaluate the costs and benefits of various postsecondary education and training institutions; 

(C) describe the process for completing grant and scholarship applications, including the Free Application for Federal Student Aid (FAFSA®) provided by the U.S. Department of Education or the Texas Application for State Financial Aid (TASFA); 

(D) analyze and compare various student grant and loan options, including private and federal loans; 

(E) interpret data from a student aid report; and 

(F) research and align personal interests and skills with potential careers and postsecondary education to assure a life strategy that will produce employment the student enjoys with a desired standard of living. 

(4) Personal financial literacy--earning. The student recognizes that a variety of factors influence income. The student is expected to: 

(A) identify sources of income, including wages and salaries, profits, interest, rent, dividends, and capital gains; 

(B) compare common employee benefits such as health insurance, sick leave, retirement plans, and other tax-favored health and dependent care plans; 

(C) differentiate among and calculate gross, net, and taxable income; and 

(D) identify factors such as educational attainment and market demand for careers that can influence the labor market and affect income. 

(5) Personal financial literacy--entrepreneurship. The student discusses the opportunities available for entrepreneurship. The student is expected to: 

(A) describe the role of the entrepreneur in creating businesses; 

(B) explain how an entrepreneur earns income, including through profits from the creation or ownership of businesses; 

(C) compare total compensation, additional benefits, and obligations as a self-employed or independent contractor and as an employee; 

(D) discuss the resources available for entrepreneurship and the federal, state, and local agencies available to assist with or provide grants for the creation of a small business; 

(E) analyze the risks and rewards of entrepreneurship, including those associated with starting a new business, owning a small business, and purchasing a franchise; and 

(F) explain the characteristics of business organizations such as sole proprietorships, partnerships, and corporations. 

(6) Personal financial literacy--spending. The student understands how to set personal spending goals. The student is expected to: 

(A) develop financial goals for the short, medium, and long term that are specific, measurable, attainable, realistic, and time based; 

(B) analyze the opportunity costs of spending and saving in recognizing short-, medium-, and long-term goals; 

(C) identify and prioritize types of purchases and charitable giving; 

(D) evaluate various forms of financial exchange such as cash, checks, credit cards, debit cards, mobile payment applications, and electronic transfers; 

(E) discuss the importance of tracking income and expenses to reconcile financial records; 

(F) evaluate the impact of unplanned spending; 

(G) analyze costs and benefits of owning versus renting housing; and 

(H) analyze costs and benefits of owning versus leasing a vehicle. 

(7) Personal financial literacy--credit and debt. The student understands the costs and benefits of borrowing. The student is expected to: 

(A) compare and contrast sources of credit such as banks, merchants, peer-to-peer, payday loans, and title loans; 

(B) identify the characteristics and dangers of predatory lending practices; 

(C) compare and contrast types of credit, including revolving and installment credit, and collateralized loans versus unsecured credit;

(D) discuss how character, capacity, and collateral can adversely or positively impact an individual's credit rating and ability to obtain credit; 

(E) explain how to access a credit report and score and interpret a sample credit report and score; (F) describe the importance of monitoring credit reports regularly and addressing errors; 

(G) discuss how personal factors such as medical expenses, job loss, divorce, or a failed business could lead to bankruptcy; and 

(H) determine and discuss if and when to use credit by considering the truth in lending disclosures. 

(8) Personal financial literacy--saving and investing. The student understands the importance of saving and investing in creating wealth and building assets. The student is expected to: 

(A) determine the exponential growth benefits of starting early to invest with continuous contributions; 

(B) determine the number of years it will take for savings to double in value by using the rule of 72; 

(C) evaluate the costs and benefits of various savings options such as bank savings accounts, certificates of deposit, and money market mutual funds; 

(D) evaluate risk and return of various investment options, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs); 

(E) evaluate the relative benefits of pre-tax and post-tax investing; 

(F) develop a short-term saving strategy to achieve a goal such as establishing and maintaining an emergency fund; 

(G) develop an intermediate-term saving and investing strategy to achieve a goal such as accumulating a down payment on a home or vehicle; and 

(H) develop a long-term investing strategy to achieve a goal such as a financially secure retirement. 

(9) Personal financial literacy--protecting and insuring. The student recognizes financial risks faced by individuals and families and identifies strategies for handling these risks to avoid potential loss of assets and earning potential. The student is expected to: 

(A) apply risk management strategies, including avoiding, reducing, retaining, and transferring risk; 

(B) define insurance terminology, including premiums, deductibles, co-pays, and policy limits; 

(C) explain the costs and benefits of different types and sources of health insurance; 

(D) explain the costs and benefits of disability and long-term care insurance; 

(E) explain the costs and benefits of life insurance, including term insurance and whole life insurance; 

(F) explain the costs and benefits of property insurance, including homeowner's and renter's insurance; 

(G) explain the costs and benefits of automobile insurance and factors that impact the price of insurance, including the type of vehicle, age and sex of driver, driving record, deductible, and geographic location; 

(H) identify ways to reduce risk of identity theft and protect personal information; 

(I) describe and identify examples of common financial schemes and scams such as Ponzi schemes and pyramid, phishing, check cashing, and home renovation scams; 

(J) explain how consumer protection agencies protect consumers against fraud; and 

(K) explain the importance of estate planning, including guardianship of minor children, wills, beneficiary designation, power of attorney, living will, and medical directives. 

(10) Personal financial literacy skills. The student understands how to set personal financial goals. The student is expected to: 

(A) use problem-solving and decision-making processes to identify a problem, gather information, list and consider options, consider advantages and disadvantages, choose and implement a solution, and evaluate the effectiveness of the solution; 

(B) develop a budget that addresses short-, medium-, and long-term financial goals; and (C) explain why earning income, spending, credit, debt, saving and investing, and protecting and insuring assets are important parts of a comprehensive financial plan and develop a plan that incorporates these components. 

Source: The provisions of this §113.76 adopted to be effective August 1, 2022, 47 TexReg 4511.