More Emphasis Needed For Financial Literacy
With the extreme volatility on Wall Street, those of us trying to survive on Main Street need to become much more financially literate.
For the last two years, consumer spending has outpaced after-tax earnings and we carry approximately $2.5 trillion in debt, excluding home mortgages. We can — and must — teach the next generation to do better.
Vocab Power
When did you first learn what compound interest was? Did you understand mortgage rates and the different types of loans that were available before you bought your first house? Or are these concepts still a little cloudy even now for you to articulate? Are you a responsible steward of the economy and will you teach your children to do the same?
Unfortunately, research indicates that only 43 percent of parents nationally have discussed the importance of prioritizing needs and wants with their children. Furthermore, a surprising 42 percent of parents have not taken any steps whatsoever to discuss financial basics with their children, according to Capital One’s 2006 Back to School Survey.
Many parents assume — incorrectly — that their children learn money-management skills as part of their school’s curriculum. In fact, fewer than half of U.S. states require even a basic economics course, much less an education in personal financial literacy.
With more than 60 percent of students in the Worcester Public Schools coming from low-income families, parents are often unable to teach essential life skills such as balancing a checkbook, prioritizing expenses and securing a loan, the reason being that these are families living from paycheck to paycheck.
In Massachusetts, financial-literacy education is a requirement, but additional state funding is generally not provided. Therefore, it is even more critical for schools to work with organizations that can provide relevant financial-literacy education for students.
Sound financial education and a solid grounding in fiscal responsibility are basic self-defense for all citizens — especially young people. Financially literate people are more likely to be self-supporting, to prepare for financial setbacks and emergencies and to increase their standard of living through wise spending, saving, planning and investing, according to the U.S. Financial Literacy and Education Commission. They also are less susceptible to scams and identity theft. Financially literate citizens contribute positively to the local and national economy, improving peace of mind and national stability.
How can young people get this financial knowledge that they so desperately need? Fortunately, there are organizations who are answering the call to educate the next generation of consumers about how to manage effectively their money. Junior Achievement of Central Massachusetts is one such organization, working closely with more than 500 volunteers from the business and education communities to teach K-12 students annually age-appropriate, hands-on lessons about financially literacy.
Possessing the necessary practical skills, these students will grow up to run our nation’s businesses, government entities and educational institutions. Hopefully, they will demonstrate more fiscal discipline than their predecessors in both their personal and professional lives, resulting in more robust communities and a stronger American economy.
I encourage businesses to support pro-education, anti-poverty organizations such as Junior Achievement, which reaches annually more than four million K-12 students in the U.S. The turmoil in our financial markets demonstrates clearly the need to take decisive action today. It is a sound investment in our children’s futures.
Deb Hopkins is president of Junior Achievement of Central Massachusetts, based in Worcester. For more information on JA of Central Mass., visit www.centralmass.ja.org or view a three-minute video at www.paganomedia.com/videos/ja.
WBJ Web Partners
Most Recent
Most Recent
0 Comments