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Jason Alderman

Jason Alderman

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Financial Literacy Teachable Moments Come at All Ages

Posted: 04/20/11 01:45 PM ET

I learned a lot of valuable information in high school, but one subject that wasn't on the curriculum was personal financial management. We didn't learn how to balance a checkbook, why budgeting is important or how credit card interest works, among other life lessons.

Fast forward a couple of decades and technological advances have resulted in an exponential increase in financial products available to consumers, making financial decision-making all the more difficult; yet financial literacy courses are mandatory for high school graduation in only four states.

This was one of many issues tackled at the fifth annual Financial Literacy and Education Summit, hosted by the Federal Reserve Bank of Chicago and my employer, Visa Inc., on April 4, 2011. Leading experts, including key members of President Obama's Advisory Council on Financial Capability (ACFC), also discussed:

  • What is government's role in improving global financial literacy for people of all ages?

  • How can financial literacy levels be improved in the current economy given dramatic government and school budget cuts?

  • How can government, non-governmental organizations, the private sector and educators together implement an effective, coordinated strategy for reaching consumers and equipping them with the necessary tools and resources to make wise financial decisions?

Some pretty sobering statistics were presented. According to the U.S. Department of Treasury:

  • 49 percent of Americans have difficulty keeping up with monthly expenses.

  • 51 percent haven't saved enough to cover three months' of expenses in an emergency.

  • 58 percent have never tried to figure out how much they need to save for retirement.

  • 59 percent have saved nothing for their children's education.

  • 15 percent have no checking, savings, money market or other types of bank accounts.

But, as we learned at the Summit, there are encouraging signs that the government, businesses, educators and others are building new financial literacy tools and methodologies that are reaching and changing behaviors among students and adults of all ages.

Summit participants included:

  • Roland A. Arteaga, ACFC Member and President and CEO of the Defense Credit Union Council

  • Maria Bartiromo, anchor of CNBC's Closing Bell

  • Ted Beck, ACFC Member and President and CEO of the National Endowment for Financial Education

  • Janet Bodnar, editor of Kiplinger's Personal Finance Magazine

  • Charles L. Evans, Federal Reserve Bank of Chicago President and CEO

  • Richard G. Ketchum, ACFC Member and Chairman and CEO of the Financial Industry Regulatory Authority

  • Byron Pollitt, CFO, Visa Inc.

  • Rosie Rios, U.S. Treasurer

  • John W. Rogers, Jr., ACFC Chair and Chairman, CEO and CIO of Ariel Investments

  • Carrie Schwab-Pomerantz, ACFC Member and President of the Schwab Foundation

  • Ian H. Solomon, U.S. Executive Director of The World Bank

They shared insights, success stories and personal examples gleaned from their endeavors in advancing financial literacy. Here's a brief sampling:

  • The Financial Literacy and Education Commission (FLEC), a consortium of 22 federal government agencies and bureaus, has developed the framework -- Promoting Financial Success in the United States: National Strategy 2011 -- for an overarching financial literacy strategy, establishing concrete goals for public and private sectors.

  • Parents should look for teachable moments. When kids clamor for a new Nintendo, use it as a springboard to discuss the relationship between money and time. To paraphrase Solomon: Tell your kids, if I'm going to pay $100 for this thing, how long will I have to work to pay for it and how much time does that mean I'll have to be away from you?

  • Financial education is a continuous process, from children's allowances to retirement decisions, but age-appropriate timing is the key: Yes, you can teach teenagers how mortgages work, but they're much more interested in learning how to buy a car.

  • Make it fun. Research by the University of Florida, among others, has shown that students who played educational video games like Visa's Financial Football scored better on benchmark exams those who did not.

  • There's a huge opportunity for teachable moments in the workplace. Research shows that 70 percent of employees would like to have financial education provided by their employer. The ACFC currently is exploring ways to engage corporations in this effort.

  • Many teachers feel they don't have the skills, background or classroom time to adequately teach financial literacy, yet 89 percent of teachers surveyed (and 85 percent of parents), feel that it's important to have financial education programs in the schools, whether it's part of the formal curriculum, after-school programs, games, etc.

  • Encourage local schools to offer relevant financial curriculum that will prepare students for financial challenges they'll face as adults. As Rogers noted, "I took years of French in high school and college but I've only been to France three times in 30 years. I didn't take a single course teaching me anything about the stock market or compound interest or investing."

  • Panelists urged employers to create meaningful part-time jobs for high school students so that they can begin to equate how long they have to work to pay for things. Research has shown that kids who have jobs are much more likely to be high savers.

  • Middle-school children frequently ask, "How do I get a job, how do I earn money?" Parents should look around the neighborhood and ask, "What are things I would pay for?" Maybe it's taking out recycling bins or picking up newspapers while you're on vacation.

To watch a free webcast of the 2011 Financial Literacy and Education Summit, click here. Also, visit MyMoney.gov, the government's website dedicated to teaching Americans the basics about financial education.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

Follow Jason Alderman on Twitter: http://twitter.com/PracticalMoney