Monday, April 10, 2006

Financial Literacy for Kids

“They like to spend it, but young people don't know much about how money works. On average, high school seniors answered correctly only 52.4 percent of questions about personal finance and economics, according to a nationwide survey released Wednesday.” Associated Press, 5/4/2006

Conducted by the Jump $tart Coalition for Personal Financial Literacy and released at a press conference opened by Ben Bernanke, Chairman of the Federal Reserve Board, the survey indicates that financial literacy rates among American high school students are unacceptably low.

A non-profit organization, Jump $tart is at the forefront of a movement to address the problem, in part by introducing financial skills into the public school curriculum K-12. Supported by the Federal Reserve, the US Treasury Department, academicians, and the financial services and accounting industries, the movement responds to a variety of worrying trends and events, including:

- Skyrocketing personal and national debt levels;

- Fraying of safety nets such as pension funds and Social Security and their replacement by the fiscal imperative of personal financial self-sufficiency; and

- Ongoing recovery of the US stock market after the bursting of what was apparently a 4 trillion dollar bubble in shareholder value.

Though weaknesses in corporate governance and conflicts of interest in the accounting and financial services industries were important factors in the 90’s bubble, low financial literacy rates on the part of the investing public also contributed. (The sins of the father are visited on the son?)

In addition to the Jump $tart website, have a look at Independent Means Inc. Its CEO is Joline Godfrey, author of Raising Financially Fit Kids. There is a link to excerpts from her book, and I was struck by these guiding principles:

- Financial competence is at the heart of true independence and self-reliance.

- Financial education is economic self defense. An ability to make sound decisions throughout life requires basic skills and financial wisdom acquired through practice and experience.

- Financial education is about character and values, not just the money. Mindful self-management of desires and values is essential to the stewardship of social, family, and capital assets.

- Financial fluency begins in childhood and is a lifelong process, acquired through the iterative learning of the Ten Basic Money Skills.

This background explains how I arrived at the second item in my wish list of 4 things I'd like my kids to be able to do on finishing school. By the way, pardon the ethnocentric nature of the evidence presented above. Maybe others will step forward with experiences from elsewhere in the world.

1 Comments:

At 12:06 PM, Anonymous Anonymous said...

Why should JIS tech this? Teaching money skills are the parents' responsibility.

 

Post a Comment

<< Home