Do the Math

Schools must rewrite curriculum to include financial literacy to provide students with crucial skills.

By William Coffin- Monday, April 8, 2013

As Los Angeles slowly emerges from one of the most difficult economic downturns in its history and public policy is emerging to lead us forward into the next cycle business, leaders are uniformly in support of the usual business-friendly propositions: lower taxes, less regulation and red tape, a better trained workforce, improved infrastructure. These are all excellent elements of an improved economic climate debate, but what about improved financial literacy among students and young people?

Financial literacy is a critical life skill. Ask any one of the tens of millions of Angelenos impacted by the $7 trillion decline in the value of household wealth starting in 2008, which was at least in part caused and sustained by basic misunderstandings of personal finance and a lack of economic thinking, and the answer is a resounding, “Yes, financial literacy is important.”

This life skill is important at any age, but it is particularly important for young people preparing for their future. It is not a large stretch to note that a student’s credit history can be as important to his or her future as their grade point average. Yet most students fail standardized testing on the subject and most schools do not offer even a basic class on personal finance. How can we expect a different outcome when the next financial crisis arrives?

I strongly urge the business community of Los Angeles and all citizens interested in a strong economy in this great city to ask for and demand that financial literacy be required to be taught in our schools. A good place to start is to support AB 166, authored by Assembly member Roger Hernandez, which would at least incorporate some financial literacy training in the one economics class required to graduate from high school. This would be a low-cost, high-impact ingredient in preparing tomorrow’s consumer-citizen-workforce member.

Today’s students need to know more about the complex financial decisions that face them, including the decision to stay in school or drop out, the choice of college and how to pay for it, the decision to begin or defer starting a family, the balance between current spending and saving for the future. And yet students today are less prepared than any time in recent history.

Let’s start with basic knowledge of financial literacy. In 2012, virtually all studies conducted to measure levels of personal financial literacy among K-12 students reflect low levels of practical knowledge on the subject.

In the survey “The Financial Literacy of Young American Adults,” measured by the Jumpstart Coalition, high school students score just 48.3 percent. And while the average score for college students increases to 62 percent, the bad news is that since only 30 percent of students finish college, that means 70 percent of young people are likely to lack the skills to make good financial decisions.

Bad credit

Today, a Fair Isaacs Corp. score can be more important than an SAT score. A bad Fico score can change the trajectory of a young person’s life by restricting the capital resources needed to go to college, buy a car or access credit. In a recent Schwab MoneyWise survey, the majority of young people consider “making better choices about managing money” the single most important issue for individual Americans to act on today.

Clearly young people are focused on the weak economy and its effect on their future. And yet there is no clear path to learning about financial literacy throughout their educational career. Financial literacy is not required to be taught in Los Angeles or anywhere else in California for K-12.

Students who do participate in programs featuring budgeting, credit and credit abuse, the economic role of banking, saving-investing and understanding of capital markets improve their understanding and comprehension of these important topics by 30 percent or more. In addition, students uniformly vote with high marks regarding their interest in the topic, enthusiasm in pursuing additional learning opportunities and ability to relate the learning to their everyday lives.

April has been designated California Financial Literacy month to highlight the importance of financial literacy and encourage all of our citizens to increase their understanding of saving, investing and credit choices. I urge the business community of Los Angeles and citizens who care about better trained and prepared young people to support the efforts of organizations like the California Council on Economic Education and Assemblyman Hernandez’s AB 166, which provides a small step toward preparing our young people for the complex global economy that awaits them.

No shortage of financial education resources!

There’s an abundance of excellent financial education tools, games and lessons for today’s high school student to become financially literate.

If you know a high school student, make sure they are getting a financial education.

Now we just need to use them!

Teachers today have a lot of support from the community and businesses to help high schoolers learn critical personal financial education lessons. Parents are encouraged to use these tools too.

Most importantly, if you know a high school student, ask them if they are learning financial lessons in school today. At a minimum, they should be learning about budgets, credit cards and loans.

Financial education resources

Here are some great resources, at no cost to parents or teachers, to teach high school students how important sound financial decision making is to their future well being.

• MoneyWiseTeen – an award-winning online program with classroom lessons and year-end contests in California. Register now for programs and contests!
• An impressive effort to certify high school students in financial education in Illinois. Read the full article.
• Teachers register at EconWorks for the best financial education lessons nationwide.
• Watch how students in Montana are learning to be finanically literate
• Check out CalCPA’s site for a variety of tools and resources

Join CCEE for professional development workshops and ready-to-use classroom lessons at no cost to teachers!

Technology in the classroom

Teach financial literacy with EconWorks!

Study cites 73% of teachers use cellphone in the classroom.

A recent Pew Research study found that the majority of teachers have welcomed the use of digital technology in their classrooms. The cellphone is the most common device.

These teachers are pretty tech savvy and while they embrace the new technology, they are concerned about the digital divide of their students.

Also, read Mashable’s recent article for details.

Digital technology for your classroom

CCEE’s new online learning platform, EconWorks! offers:

• Highly scalable, classroom-ready economics and financial lessons
• All lessons align with California’s Common Core Standards in Mathematics, Reading, English Language Arts and History/Social Studies
• 24/7 online access any device with Internet access
• Access for rural and metropolitan communities alike
• Real-time assessment tests and outcomes data
• Ability to track a group’s skill level
• Ability to identify individual student comprehension, offering specific training as needed to ensure all students grasp the concepts
• No cost to teachers

Register with EconWorks! today

Financial literacy primer: Money as You Grow

Amy Rosen was asked by President Obama to serve as the Vice Chair on the President’s Advisory Council on Financial Capability and to chair its youth sub-committee. Here’s what she found:

Make financial literacy a reality with simple tool for parents to teach their children about finances

Her recent Forbes article, “Financial Literacy for All Young Americans,” outlines two key findings:

• Make sure that financial education is included in the international assessment study
• Develop a simple list of concepts that all children in America should know, called “Money as You Grow”

The Money as You Grow website is an elegantly, simple approach to teaching children ages 3–18 the main financial concepts they should know.

Check out CCEE for more financial literacy tools:

• The Decision-Making Apron for all ages
• MoneyWiseTeen for high school students
• The new Personal Finance Challenge for middle and high school students

Teachers join CCEE for:

• Professional development workshops at no cost
• Classroom-read lessons
• EconWorks

The reality is financial literacy matters

College students report that they need help making financial decisions.

Photo source: Chi Birmingham, Bloomberg Businessweek

You see it in the news nearly every day: college students are not prepared to face adult life after graduation.

Chalk this up to many reasons: from weak economic and employment prospects to high student debt and climbing costs to attend college in the first place.

Leaving the nest can be a scary prospect.

The Californian’s article, Why Financial Literacy Matters, sums up the current environment for college grads well. They cite valuable insights, such as:

Prepare your students with the financial literacy skills they’ll need

As a parent or teacher, don’t ignore the fact that financial education teaches required skills for the global 21st century economy.

The world your children face will assume all citizens have fiscal decision-making skills as they grow into tomorrow’s savers, investors, workers and financial decision makers for their household.

Here are some tools from CCEE for teachers:

• MoneyWiseTeen program and contest for high school students
• Financial Fitness for Life: K–12
• Lessons from the Federal Reserve
• Read about a financial literacy pilot program in Vermont

Join CCEE today!

Teachers who join CCEE access professional development workshops and ready-to-use classroom lessons for K–12 graders…at no cost to teachers!