Tackling financial illiteracy

I read today’s news, that the Obama administration had “announced a new campaign to promote financial education for high school students nationwide,” with mixed reactions. On the one hand, it’s a no-brainer that students need a better understanding of financial issues, both to handle money wisely in their personal lives and to be well-informed voters when it comes to how their tax money is used. But is a new campaign pushed by our President the best way to accomplish that?

Looking for related news stories, I discovered that the President’s Advisory Council on Financial Literacy had made a number of recommendations last January (prior to Obama’s inauguration), including that “Schools should be required to teach financial education from kindergarten through 12th grade.” Wondering why it took so long to even start to implement these, I read another article which explained that the changeover in administrations was one barrier to faster progress (presumably that would have been the case regardless of who the outgoing and incoming Presidents were).

It also pointed to the difficulty in implementing any kind of nationwide educational requirements, because most curricular decisions are made locally. Furthermore, teachers are already struggling to fit current curricular requirements into their class schedules. How are they going to squeeze in one more?

Ideally financial literacy is not treated as a separate program but is integrated into other classes. I think several things I read did stress this point. But I can’t help wondering something that I didn’t see addressed in any of the articles I read – what are the reasons this isn’t happening already? If something as obviously needed as financial literacy hasn’t already been incorporated into classroom teaching, are there underlying problems that won’t be solved by simply adding a new program at the federal level?

I had been giving some thought to this already because I’ve been working on preparing my next speech for Toastmasters, in which I hope to persuade people to consider becoming classroom volunteers for Junior Achievement. Junior Achievement is all about helping students understand money, personal finance, and how business works in our economy. JA has excellent tools for doing this, and by using volunteers from local businesses, they teach not only the material in the curriculum but that businesspeople are good role models.

My impression – which may be wrong, and is based only on my limited personal experience plus what I’ve heard from other people – is that classroom teachers generally have pretty limited knowledge (or perhaps even interest) in business and finance issues themselves. Public education is a non-profit institution, and teachers have very often been trained at public universities. They may never have worked at a for-profit organization. It’s pretty hard to have a good understanding of business without ever having had personal involvement.

One can certainly know personal finance, of course, without understanding business, but what is needed most is an understanding of economics, which seems to intimidate a lot of people. I know I found economics the most difficult subject I studied in graduate school (which had the effect of motivating me to take a second course in the subject, as I refused to be mastered by a subject instead of mastering it). But how much of that was because I had so little prior knowledge of the subject?

My impression as a young person was that a concern with money was a sign of a shallow, greedy person. I was idealistic – as young people tend to be – and I can’t think of any teacher who ever tried to counter that tendency. (Perhaps people with idealist tendencies gravitate toward professions such as teaching?) It wasn’t until I got a job in business myself that I came to see business as the engine of the economy, without which we would have neither money to spend nor products to buy.

Money is certainly not to be the center of our lives. It’s only a tool. But like any tool, to use it well one has to understand how it works. And to understand it, one has to care about knowing how it works, and know the basic skills that its use requires. In this case, that’s math, and for some reason a great many people seem have some kind of math-phobia.

So what is it, exactly, that the Obama administration has in mind to tackle this problem of financial illiteracy?

The first step in this effort, the administration said, will be the National Financial Capability Challenge, a national award program designed to encourage financial education in schools nationwide. The administration will boost resources to support the program’s implementation and increase its reach to focus on poorer communities, which the survey said suffer the most from little access to financial education.

Starting today teachers, schools, school districts, and youth groups can register online to participate and early next year a teacher “tool-kit” will be sent out to all registered teachers. The Challenge exam will be offered in late March of this year.

I’m sure the tool-kit will have useful resources to help teach financial literacy. Motivated teachers and students will no doubt benefit from it. But I’m afraid a tool-kit will do little to change attitudes towards money and finance, attitudes that have led to our current epidemic of financial illiteracy. Effective change starts at the local level, where parents and teachers agree that the students in their community need something and work together to implement it. Otherwise, it’s just one more federal mandate competing for scarce minutes in a crowded school day.

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