Financial Literacy Month

“Career and Life Readiness” Require Financial Fitness

Arkadi Kuhlmann “Career and Life Readiness” Require Financial FitnessBy Arkadi Kuhlmann, Founder and CEO of ZenBanx, Founder and Former CEO of ING Direct


The lunch table conversation was light and collegial, focused on the upcoming weekend activities until my colleague burst the jovial bubble by asking if everyone had fully funded their 2014 and 2015 IRAs. Squirming ensued. All of the 20 and 30 something Silicon Valley tech professionals were clearly outside their comfort zone. One young woman shared that she started the process but stopped when she learned she needed to choose investments for the money. “I can write Code, but have no idea about finances and investments, she confessed.” A teammate jumped in commenting, “My wife’s parents keep asking us if we are saving for a house, but we’re too embarrassed to tell them we don’t even have a budget or a savings plan set up.”

In Silicon Valley, where over half of the 2014 Harvard Business School MBA class moved after graduation,[1] not one of the eight professionals at the table had an IRA, nor did they contribute to the Company’s 401k plan.

I’d like to say I’m shocked, but that emotion occurred years ago when I first understood the dismal state of our nation’s financial fitness, joined the Council for Economic Education and became an advocate for Financial Literacy curriculum in our schools.   Despite surveys and focus groups that consistently reveal that students required to take a financial literacy class in high school are significantly more financially responsible, more averse to debt, and more likely to pay off credit card debt on time than their peers who did not, only 22 states mandate an economic education course as a pre-requisite for graduation and only 17 require a personal finance course.[2]

As parents, employers and mentors, we can talk about needs versus wants and the value of savings versus spending. That is if we, as parents and employers, are ourselves financially literate and managing our savings, spending and debt, and investing for our retirement and healthcare needs. As employers, we can offer 401k incentives to encourage financially responsible behavior, but without the understanding of economics, those are grains of sand and Band-Aids.

Lacking a financial fitness foundation, young adults are assuming college loans with no understanding of the cost or process to repay them. Students and work-force ready young adults graduating high school without any foundation in credit scores, credit cards or mortgages, charge forth into life and debt, and resort to credit cards to fund their fun.

While a handful of states recognize the importance of economic and financial literacy education, all states need to do so in order to positively impact future generations.   Each of us can help our youth navigate life to the best of their abilities by encouraging our state and local representatives to designate economic education as a subject of critical importance that should be taught to every student before graduating from high school. Navigating the future will require our youth have a toolbox complete with job skills, an understanding of personal finance and budgeting, along with flexibility, fortitude, and compassion. Let’s make certain the toolbox is full.

Arkadi Sig 150x116 “Career and Life Readiness” Require Financial Fitness

[1] move-to-silicon-valley-2014-7


POSTED: April 23, 2015 | BY: Daniel Thompson | TAGS: , , , ,

Working to Advance Financial Education in Schools

Richard Cordray 264x300 Working to Advance Financial Education in Schools
By Richard Cordray, Director of the Consumer Financial Protection Bureau


As we observe National Financial Literacy Month, let us all continue our efforts to ensure children and youth develop the skills and habits that will help them to make better financial decisions as they become adults. There is not a single good reason – none – that should prevent any American from gaining the knowledge and skills needed to build a healthy financial future.

With a growing number of committed public, private, and nonprofit organizations working to advance K-12 financial education, no one needs to go it alone. Just recently, the Consumer Financial Protection Bureau (CFPB) developed a resource guide to support leaders interested in advancing K-12 financial education by connecting them to ongoing conversations and providing access to information, tools, and resources. The guide includes a framework, case studies and strategies on how best to lay the groundwork, build the initiative, and extend the impact of K-12 financial education. The resource guide is called “Advancing K-12 Financial Education: A Guide for Policymakers” and is available for download.

When I served as the Franklin County Treasurer in Ohio a decade ago, we formed a local committee on personal financial education to help further the vision of a society where everyone could strengthen their financial skills. We gathered information about school programs for young people and community programs for adults, and we matched people up with those available resources. With the support of a broad coalition we created an impetus for what is now an Ohio state law that requires personal financial education for all high school students through the integration of economics and financial literacy within social studies classes or another class. Ohio is one of 17 states to require that high school students take a personal finance course in order to graduate.

Achieving meaningful and lasting change will require bold and innovative approaches. The CFPB resource guide is a bridge to connect leaders with tools, information, and insights to help them enhance K-12 financial education efforts. As policymakers continue to explore options to incorporate financial education throughout the K-12 experience, I hope that everyone who is interested in financial education for our nation’s children will use this guide and share it with others.

Benjamin Franklin once said, “An investment in knowledge always pays the best interest.” This may be most true in the case of financial education. Starting early with age-appropriate and relevant financial education and consistently reinforcing those lessons throughout the K-12 school experience can help children and youth develop positive habits and skills that can make a lifetime of difference in their financial well-being.

POSTED: April 22, 2015 | BY: Daniel Thompson | TAGS: , , , ,

More Must Be Done to Position Young People for Success in the Future

Raymond McDaniel More Must Be Done to Position Young People for Success in the FutureBy Raymond W. McDaniel, Jr., President and Chief Executive Officer, Moody’s Corporation

April is Financial Literacy Month. It’s also the time when high school seniors begin to focus on their plans beyond graduation. For those who are college-bound, the economic realities of preparing for college—applying for student loans, financial aid and credit cards—begin. And for all students, the realities of taking on adult responsibilities, such as managing their own personal finances, come into focus.

Yet, more than half of all US states have no financial literacy requirements for pre-high school education programs, and only seventeen states mandate personal finance classes in high school. This leaves a critical skills gap for students. Consider the following:

  •  A recent study by FINRA (the Financial Industry Regulatory Authority) concluded that a large proportion of young Americans today are less likely than older Americans to be financially capable, due to a lack of understanding of fundamental economic principles.
  • A similar TIAA-CREF study showed that people with a high degree of financial literacy are more likely to plan for retirement and will have more than double the wealth of those who don’t.

It is clear that more must be done to enable young people to make sound personal financial decisions that will help position them for success in the future. That’s why Moody’s strongly supports The Council for Economic Education’s (CEE) work to expose young people to economic and financial education early in their academic careers. CEE’s advocacy and actions are critical to the development of innovative workshops, courses and materials for educators and will help lift the economic awareness of young people across our country, particularly those entering college this fall.

With support from CEE and its partners, students will master concepts like saving, investing, credit, insuring and earning income. Understanding these concepts at an early age is critical and will help them make the best choices in the future. By developing these new skills, they’ll be more confident and more likely to succeed, both academically and financially, and have more options available to them as they consider their life after graduation.

POSTED: April 21, 2015 | BY: Daniel Thompson | TAGS: , , , ,

Incorporating Economics in the Elementary School Curriculum

ohagan Incorporating Economics in the Elementary School CurriculumBy Kathleen O’Hagan, Special Representative at the UFT, Former 4th Grade Teacher, 2014 Alfred P. Sloan Foundation Teaching Champion Awardee

Today’s public schools are tasked with so much to teach that it isn’t surprising that many essential skills are over-looked with the current focus on reading and math scores and standardized tests. What is often missed in this narrow focus is the impact that these other essential skills can have on reading and math instruction. The curriculum in the elementary school where I taught was of both high rigor and high caliber but it neglected economics to concentrate on reading and math. With this in mind, I recognized the need to bring this subject to our students, the majority of whom were English Language Learners (ELLs) or former ELLs. After the economy was hit hard in 2008, I wanted my students to learn more about saving for their futures and the many long-term benefits, versus the costs, of college but I didn’t know how to bring this instruction into my elementary classroom.

OHagan in the Classroom1 300x167 Incorporating Economics in the Elementary School CurriculumThe Council for Economic Education showed me how to incorporate these ideas into my classroom. It began when I took their course on how to create a mini-economy. With this training, I was able to make our class a place where students learned (as part of their math curriculum) how to keep bank accounts, act as bankers and store clerks, open pencil-loaning businesses, and also experience the real-life issues of rent, tickets, co-payments, unexpected expenses and price inflation. Then in the next year, my next class moved beyond just being consumers in a mini-economy to being producers by utilizing a three-dimensional printer to create the store stock and in the process began to investigate the issues of supply and demand in their mini-economy. Imagine their excitement when they were featured in an article about their mini-economy, not just the first class, but two classes, two years in a row! Talk about underscoring the importance of the economics they were learning!

Not surprisingly, the students’ reaction to this instruction was enthusiastic and they were utterly engaged. What was surprising was the powerful response from the parents who were delighted to have their students learning economic vocabulary such as deposit, withdrawal, expenses, goods, consumer, etc. and the real-life experiences of keeping a financial log and having to learn about delayed gratification if they wanted to save up their money for larger purchases in the future.

In addition to all of this economic instruction, we eventually added the element of debate, around economic topics which included: “Should the Penny Stick Around?” and in so doing, incorporated elements of reading and writing. My students learned the importance of research, interviews, and public speaking in addition to developing an understanding of the need to save for the future, but not just any future, THEIR future. The mini-economy was a success at getting even the most reluctant student out of the sidelines of learning and into the heat of debate. For example, my most reluctant writer would always have his essay ready so that he could be on one side of the debate when it was time to start talking about economic issues.

The mini-economy even outgrew our classroom and spread to other classes on the grade, including inter-visitations for debates. Most importantly, it empowered the students to feel confident about making financial decisions, understanding the importance of saving, and it even made the most reticent students outspoken about the importance of economics in their life. Economics instruction ultimately became embedded in the very math and reading skills that originally seemed to have no room for anything more and in so doing, equipped my students with the traditional skills taught as well as essential economic skills.

POSTED: April 17, 2015 | BY: Annamarie Cerreta | TAGS: , , , , ,

Nothing is More Powerful than Teaching Financial Literacy

Darren Gurney Nothing is More Powerful than Teaching Financial Literacy By Darren Gurney, Economics Teacher, New Rochelle High School, New Rochelle, NY, 2014 Alfred P. Sloan Foundation Teaching Champion Awardee.

As an educator, nothing is more powerful than teaching financial literacy. Having taught a variety of social studies topics during the past 18 years as a teacher, I know that financial literacy is as valuable as any topic that students are exposed to in their schooling. Moreover, other than health education no subject is as “real world” applicable as exposing adolescents to personal financial issues.

DGURN 300x167 Nothing is More Powerful than Teaching Financial Literacy When students enter my classroom for the first time, it astonishes me how little they know about basic financial concepts. Balancing a checkbook, using credit cards, understanding mortgage rates, contributing to retirement accounts, stock/bond investing, using debit cards, opening savings accounts, applying for car loans, and other day-to-day financial areas are topics which students are not exposed to in their primary education. These are activities that all adults face in their daily lives. Why are children taught trigonometry, chemistry, and other concepts that are irrelevant to their existence? Perhaps our schools’ inability to evolve past our “liberal arts” educational goals or a dependence on our countries’ long standing subject areas, the content provided to our students and future citizens is nonsensical.

Why not create educational curriculums that focus on material which students of all educational abilities will utilize later in their lives? Schools should be focused on teaching skills, such as critical thinking, analytical, public speaking, writing, arithmetic, and communicating effectively with others (socialization). The content used to foster these skills is largely insignificant. But, in learning these skills it serves our nation best by introducing financial literacy concepts that our youth will deal with daily as they age and move through college and into their careers.

Most of all, students enjoy learning about financial literacy. Stock market investing competitions, studying entrepreneurs and small business topics, completing tax returns, studying mortgage rates and real estate prices, and analyzing state/federal taxation policies ultimately motivates students a great deal. Why should we force our children to battle through William Shakespeare’s writing or memorize terms like mitochondria or pi, when most Americans are financially illiterate? Maybe if we channel our energies in these areas, the typical US household will not be saddled with so much debt. In turn, our nation’s leaders may be able to do a better job of not growing our $17 trillion national debt.

POSTED: April 16, 2015 | BY: Daniel Thompson | TAGS: , , , ,

It’s All About Implementation: Promising Results for State Financial Education Mandates

J. Michael Collins Its All About Implementation: Promising Results for State Financial Education MandatesBy J. Michael Collins, Ph.D., Center for Financial Security, University of Wisconsin-Madison

The growing complexity of financial decisions facing American consumers has prompted an increased emphasis by policymakers on promoting financial education at all stages of life. One group of specific concern is young adults, as they have been shown to have particularly low levels of financial literacy (Lusardi et al., 2010 ).

The 2008 financial crisis further demonstrated the need for broad-based financial education. However, the existing body of research on the effectiveness of financial literacy education has yielded limited evidence that it improves financial outcomes and behaviors according to research (Fernandes et al., 2014 and Willis, 2011

Policymakers have promoted financial education in schools as a means of combating negative financial behaviors and low levels of financial knowledge. However, research on the effectiveness of financial education has found, at best, mixed evidence in terms of education resulting in changes in financial behaviors. Even in the absence of evidence on the effectiveness of financial education, policymakers at the state level have expanded and strengthened personal finance and economic education requirements for K–12 students, a topic which has been taught in K–12 public schools in the U.S. since the 1950s. Determining which particular financial education programs yield the greatest benefits would allow states to design an effective curriculum.

Yet, we have natural “experiments” in states all the time, where school systems implement new mandates for courses that must be taught–and tested–before a student can graduate. At least 2 states, Georgia and Texas, did so in 2007. Thanks to data from the Federal reserve, my CFS [] colleagues Carly Urban [ ] and Max Schmeiser [ ] were able to obtain a sample of credit records for people in these states and nearby states (New Mexico and Florida–both states with no change in financial education mandates for high school graduation).

We then compared the changes in credit scores and loan delinquencies in states after implementation of the mandate to the changes in comparable states that did not pass mandates. Both GA and TX implemented well-documented requirements and testing, so we are confident students who graduated after 2007 were exposed, at least on average, to more financial education. Overall, we find that if a rigorous financial education program is carefully implemented in schools, it can improve the credit scores and lower the probability of delinquency for young adults. In Georgia, graduates after the new education mandates have credit scores 11 points higher and 30 day delinquencies are lower by 4.2 percent. In Texas, graduates after the mandate have credit scores over 31.7 points higher and lower 90-day delinquency rates by 6 percent, a relative decrease in delinquency rate of 33 percent (view full report: ).

All young people have lower credit scores—they are learning by experience. And, according to our data, nearly a quarter of young people are 30 or more days behind on at least one account. Yet, payments have big effects on the credit score of someone with a brief credit history and therefore, avoiding missed payments can have real long run effects.

More work needs to be done to understand what forms of education best benefit young people, if starting earlier has larger effects, and if less intense requirements might result in similarly sized benefits. We still do not know how well these effects will persist into later adulthood—but formal education may jump start trial and error learning that young adults often experience in credit markets.

POSTED: April 15, 2015 | BY: Daniel Thompson | TAGS: , , , ,

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