05/18/04 -- In response to evidence that many students complete high school unprepared to plan a budget or manage a credit card, several business groups and state lawmakers are promoting instruction on financial literacy.
Teen Research Unlimited found that teenagers spent $175 billion last year -- an average of $104 per week, says American Bankers Association Foundation Chair Barbara J. Ralston. Yet most of them have never taken a class in personal finance.
Youths uninformed
"Without financial education, young people will learn about money from the school of hard knocks," Ralston says. "Since children become adults all too quickly, they need to learn money lessons now so they can make smart financial choices later."
According to the Treasury Department, "In 2001, more people filed for bankruptcy than graduated from college."
When the Jump$tart Coalition for Personal Financial Literacy was convened in 1995, it reported that the average high school graduate "lacks basic skills in the management of personal financial affairs. Many are unable to balance a checkbook and most simply have no insight into the basic survival principles involved with earning, spending, saving, and investing."
To focus more attention on this issue, Jump$tart designated April as "National Financial Literacy for Youth Month" in 2000. On April 22, the eighth annual National Teach Children to Save Day, officials from the U.S. Department of the Treasury, the American Bankers Association (ABA) Education Foundation, and Operation HOPE, a non-profit organization working to bring economic self-sufficiency to inner-city residents, teamed up to teach financial education lessons in K-12 classrooms across the country. The lessons included games and activities to teach the value of saving and budgeting.
"By reaching out to children, we can help establish smart money management habits early," said Secretary of the Treasury John W. Snow as he led the effort by teaching a class of fifth graders at P.S. 50 in the East Harlem area of New York City.
"Education is the ultimate poverty eradication tool, and financial literacy is one of the most important issues facing our nation today," says John Bryant, founder and CEO of Operation Hope.
Since ABA began going into classrooms in 1997, it reports that nearly 15,000 bankers have delivered lessons on financial literacy to almost 750,000 teenagers and younger students.
Ads target children
Advertisers are targeting young children, sometimes as early as age 3, to spend money, says ABA spokesperson Catherine Pulley. "Since children are receiving those messages, we need to teach them the importance of being financially literate."
Also in April, Operation HOPE issued a challenge to the nation to educate 5 million children over the next five years in financial literacy.
The organization's Banking on Our Future campaign, operating in eight states and the District of Columbia, recruits bankers to teach children the basics of managing their financial futures and surviving in a global economy.
Some 1,500 trained volunteers have educated more than 126,000 youths about the basics of banking, how to open and maintain a checking account, the power of credit, and basic investments, says spokesperson Andrew Sousa.
Citigroup, the parent company of Citibank, has pledged a $250,000 grant to help deliver the Banking on Our Future program to 30 schools in Washington, D.C.; Oakland, Calif.; and Harlem, N.Y.
In Chicago, city officials and LaSalle Bank Corp. launched a financial literacy program for teenagers, called Cash Cache, May 10 during the Federal Reserve Bank of Chicago's third annual "Money $mart Week."
The Cash Cache curriculum will be taught in five high school finance academies, including Schurz, Corliss, Marshall, Tilden, and Jones.
Students will be trained to make presentations on the program to help recruit new students to the academies during upcoming visits by seventh graders.
LaSalle Bank also supports the Chicago school system's "Money Savvy Kids" program for second graders in 30 low-income schools.
In Philadelphia, the school district has integrated Commerce Bank's interactive financial literacy program, the Commerce WOW!Zone, into the middle-school math curriculum to help children better understand and enjoy math.
CommerceWOW!Zone lesson plans provide educators with resources and guided interactive activities on such topics as the value of money, the difference between saving and spending, balancing a checkbook, planning a budget, and investing.
State mandates
Meanwhile, a growing number of states are taking on the issue. According to a statement issued by Jump$tart May 5, Arkansas enacted a statute mandating financial education for youth, and legislation promoting financial literacy programs have been introduced in California, Colorado, Hawaii, Kentucky, Mississippi, Oklahoma, South Carolina, South Dakota, Washington, and West Virginia.
Resolutions on the need for financial literacy education were passed in the Arizona Senate and the California House.
"The momentum for adding financial literacy curricula in schools is clearly growing," says Jump$tart Executive Director Dara Duguay.
"Only 15 percent of high school graduates nationally have taken a course covering personal finance basics," she says, "but we are hopeful these new bills and proclamations touting the benefits of such schooling will reverse this shortfall."