Improving The Grade

In an effort to test new ideas and stimulate thinking about financial literacy in schools and how best to teach it, the United States Treasury Department has announced the Financial Empowerment Innovation Fund (or “Innovation Fund.”) This was designed to support the development and evaluation of new strategies to promote financial access and financial capability among all Americans. In fiscal 2014, the Treasury Department seeks to award up to $6 million for research contracts that test and evaluate promising practices for students during the formative school years and beyond.

I recently spoke with the former chair of Junior Achievement in Richmond, Va., who discussed her own children’s levels of financial literacy in relation to the amount of education they had received on the subject. One of her older adult children did not have the benefit of a literacy program in her school. She consistently spends $5 on this, $10 on that and can’t seem to crawl her way out of debt. She has no concept of how to pay rent for an apartment, what expenses are associated with renting or what unanticipated expenses may lurk in the real world. The younger adult child, in contrast, had taken an economics class in high school that had been adopted by their state. This child is successfully saving—saving because she is both aware and motivated to set realistic goals.

There is real confusion about all the financial literacy initiatives out there. The states have most of the control over education, but every state has its own requirements, and the federal government exerts its own control. Sometimes it doesn’t seem as if the right hand knows what the left is doing. The approximately 14,000 local school districts in our country then not only interpret those higher government requirements differently, but add their own.

Financial capability must be woven into the fabric of our lives—into our homes, our schools, our workplaces and our communities. We should focus on school-based financial education policy for two reasons: First, most Americans are poorly prepared to make informed financial decisions; second, school-based financial education has the potential to reverse the current trend of poor financial preparation among future generations of Americans. By having a basic understanding of money management from an early age, our young people will be better equipped to tackle more complex financial decisions in adulthood—when the critical decisions about financing higher education and saving for retirement can have lasting consequences for financial security.

Film and television often use adult children moving back home—or never leaving—as fodder for funny and poignant stories. It’s far from humorous. These “boomerang kids,” as they are sometimes referred to, don’t want to share a roof with you any more than you want to lose the peace and quiet to which you just became adjusted.

Whether you’re a parent or not, there are many ways you can make a difference as a financial professional. You can learn about programs in place for your state and find schools that are ready to implement a new financial literacy program, if they haven’t already done so. Review the resources provided by the Council for Economic Education and ask how you can help mentor the teachers in their efforts. It’s a win-win. If the students learn more about economics and financial literacy in school, that may develop their interest in economics as a career path. It’s truly an investment in society as well as our industry’s future. 

Catherine M. Seeber, CFP, is a principal and senior financial advisor with Wescott Financial Advisory Group, with offices in Philadelphia, Boca Raton, Miami and San Francisco. She can be reached at (215) 979-1642 or via e-mail at [email protected].