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Financial Literacy as the New Civil Right: Why It Matters to Business in America

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Introducing the Gallup-Operation HOPE Financial Literacy Index

In 1960, the issue here and around the world was the emergence of democracy, and making it real to you and me. Well, let's say the minority and the poor you and me. The way we commodified democracy and "made it relevant," was the right to vote, equal access and equal rights. But today, in the backdrop of a global economic crisis, there are more people in America with no bank account than didn't have the right to vote in 1960, or 40 million (unbanked and under-banked). Today everyone -- be you white, black, red, brown or yellow -- wants some more green. Today, 70% of Americans were living from paycheck to paycheck, and that was before the economic crisis. Today, everyone needs to be bi-lingual. You need to understand English and the language of money, or financial literacy. Today, if you don't understand the language of money, and you don't have a bank account, you are an economic slave.

But this movement may prove much more difficult than the last, as money is emotional and elusive. Understanding the language of money and financial literacy is often buried in the shadows of an odd, colorless shame. 50% of those in foreclosure never pick up the phone and call their lender. The number #1 reason for divorce in America is money. The #1 reason why kids drop out of college, and particularly, black and brown kids, is not academic success but money. This year alone, 350 young ladies, who had stellar academic records, initially could not return to Spelman College simply because they could not afford tuition. Thanks to some private Spelman donors, this stark reality was reversed for all but a few of these young women on a mission to improve themselves. The "gap" here was not ambition or work ethic, but money.

How we fight this war on financial literacy will not be in the streets, but in the suites. It will feature amongst other things, a five-part strategy including:

1. Mandatory financial literacy for every youth 4th through 12th grade;

2. A domestic Peace Corps of relevant role models which connects education to real success or failure in life;

3. An electronic debit card accessed FDIC or NCUA insured bank or credit union account secured at birth, no different than your Social Security number. This would also help to push financial predators, such as payday lenders and check cashers, out of business;

4. The mother of all national financial literacy assessment -- the Gallup-HOPE Financial Literacy Index.

5. Private sector adoption of financial literacy in financial products and services, as well as Human
Resources department, such as the 5-year HOPE agreement has entered into with the Financial Services Roundtable.

The magic behind the Gallup-HOPE Financial Literacy Index

In 2009, Gallup teamed up with America's Promise Alliance to produce The Gallup Student Poll and surveyed 70,078 students in grades 5 through 12, from 335 schools and 59 districts located in 18 states and the District of Columbia.

Based on the Gallup Student Poll, half of American students are hopeful; these students possess numerous ideas and abundant energy for the future. The other half of students are stuck (33%)
or discouraged (17%), lacking the ideas and energy they need to navigate problems and reach goals. Hope varies little across grade levels. Across participating schools, class size was negatively associated with hope (larger the class, lower the hope) and the percentage of students on free and reduced lunch was not associated with hope. Furthermore, Gallup has already proven that hope is a more powerful indicator of academic success and graduation rates than GPA or ACT scores.

I cannot help but focus on this 50% hopeful number, as approximately 40-50% of urban youth in America are dropping out of high school, and it seems are not very hopeful at all.

Doubling Hope

Hope is malleable (Gallup, 2009c; Lopez, Rose, Robinson, Marques, & Pais Reibero, 2009) and 50% of American students need support from parents, school, business and the community to build their energy and ideas for the future. Financial literacy is one of the incredibly under-utilized tools that can be used to energize our youth and build their ideas in their own future. Want to keep a kid in school? Show them how to succeed, prosper, do well, even how to get rich (legally) if they want to. That's financial literacy, free enterprise and capitalism, ownership, opportunity and entrepreneurship. In short, we need to reconnect education with the relevancy of "doing well."

Financial literacy is the next civil right and the first global silver rights empowerment tool.

Without a big burst in national 4th-12th grade financial literacy, America will not be globally competitive.

The problem can't be fixed "nationally," it has to be fixed locally -- one city, one school and one student at a time, and most importantly, local leaders can't manage this phenomenon unless they can measure it. Enter the Gallup-HOPE Financial Literacy Index, 2010.

We intend to include "all" students between 5th-12th grades, so we will be gathering a census, not a sample.

We want to measure how many have a general understanding of running a business, whether they ever have held a job and been paid, do they have a savings account, do they have a positive image of free enterprise and its role in American society, and do they see themselves playing a role in it.

We are building a leadership tool with the Gallup-HOPE Index that will tell local city leaders if they are raising the next generation of local small, medium and large businesses -- businesses and jobs that will be needed to create the necessary tax base to sustain that city.

This is why financial literacy is not only the next civil right, but critically important to American competitiveness, and business too.

John Hope Bryant is the founder, chairman and CEO of Operation HOPE, financial literacy advisor to the World Economic Forum Global Agenda Council, a Young Global Leaders for the World Economic Forum, and author of LOVE LEADERSHIP; A New Way to Lead in a Fear-Based World (Jossey-Bass), which debuted in August, 2009, as the Amazon.com #1 Hottest New Book (for Leadership), on the CEO Reads Top 10 Business Best Seller List, and was published in November, 2009 in digital audio book format on Audible.com, iTunes and other audio book retailers . Love Leadership continued to be listed amongst the Top 25 Business Books for CEO READS for the 7 month period after release.