States Teaching Financial ABCs

By: - September 30, 2002 12:00 am

Teaching peo ple of all ages and backgrounds how to save and invest is becoming a priority for state officials and educators across the country. And they’re winning support from the private sector, which is bankrolling many of the more significant efforts.

But many states are no less concerned about the everyday dangers of “financial illiteracy” a dearth of knowledge about how to save, invest, set a budget, avoid debt and plan for future needs like college education and retirement.

Teaching people of all ages and backgrounds how to save and invest is becoming a priority for state officials and educators, who are alarmed by record numbers of personal bankruptcy filings and home mortgage foreclosures.

In many cases, private corporations and foundations are underwriting the programs.

Take Delaware, where Treasurer Jack Markell has spent much of the last four years creating the Delaware Money School . This year, the program presented more than 300 money management courses taught by volunteer financial professionals at locations all over the state.

Markell estimates that more than 10,000 state residents have taken Money School courses, most of which were offered for free. Grants from corporations such as Chase Manhattan, Citigroup, the MBNA Foundation, DuPont and several smaller Delaware businesses have meant the program hasn’t cost taxpayers a cent.

Why the concern? High levels of consumer debt and heavy reliance on income rather than savings and investment leads to social and economic problems. Smarter personal financial planning gins up potential new business for banks and lending institutions, too.

“For all of us, it’s important that our fellow taxpayers and fellow citizens take care of themselves as much as possible, because if they do it’s less burden on the rest of us,” Markell said.

Delaware Gov. Ruth Ann Minner agrees. In early September, her Task Force on Financial Independence released a report which noted that nearly one in four residents wouldn’t have enough money to live at the poverty level for three months if they lost their jobs.

Among the recommendations: Training social service workers to discuss basic financial matters with their clients.

“One of the key purposes of government is to empower people to succeed by giving them the tools they need to take control of their financial lives. Whether you’re liberal or conservative, Democrat or Republican, it really makes no difference. This is about helping people help themselves,” said Markell, whose Money School achievements won “Idea of the Week” recognition from the centrist Democratic Leadership Council in May.

Financial literacy initiatives started in the 1980s with Bank at School programs that introduced elementary school students to the hows and whys of savings accounts. In 1998, Oregon’s trendsetting Everywoman’s Money Conference addressed financial challenges faced by many women.

“The state treasurers are doing the most on this whole area of financial literacy,” said Don Blandin, president of the American Savings Education Council (ASEC).

The National Association of State Treasurers is conducting a survey of state-based financial literacy programs. Director Pam Taylor cites several standouts:

  • The Delaware Financial Literacy Institute (DFLI), which was established with the help of the Delaware Center for Economic Education and Entrepreneurship and more than ,000 in funding from Delaware businesses, has won one of the Council of State Government’s eight annual innovation awards. In addition to the Money School and an annual women’s summit, the program runs financial conferences for children and their parents.
  • Illinois Gov. George Ryan (R) organized a conference of state finance leaders earlier this year and, like his neighbor, Missouri Gov. Bob Holden (D), ordered a study of the need for better personal finance education programs in their states.
  • Ohio Treasurer Joe Deters and Massachusetts Treasurer Shannon O’Brien have launched online newsletters full of personal finance tips.
  • West Virginia has eleven full-time employees working on financial education programs for adults and children.

    Other states are paying attention. Ronni Cohen, who directs the Delaware programs, said officials from California and other states are actively seeking information and advice on creating similar programs and parternships with business and volunteer instructors.

    Cohen said what makes Delaware unique is its comprehensive approach to personal finance education.

    “We’re working on financial literacy for men and women, for people of diverse races, and people of all ages, from children to seniors. We’re not concentrating on one group. But we want to offer free services to people, who might not otherwise get the services they need,” she said.

    Blandin, whose organization has surveyed kids and parents in recent years on their financial savvy, applauds the Delaware program. “But if you really want to help us for the future, start with that millennial generation (children and young adults born after 1977),” he said.

    Education groups are also weighing in.

    Last year, the National Council on Economic Education unveiled a comprehensive K-12 personal finance curriculum. The Bank of America financed the project targeting schools in its 22 service areas. But Claire Melican, NCEE’s vice president for program and grant administration, said the materials are available nationwide.

    Melican said as many as 40 states include some level of personal finance comprehension in their K-12 standards, typically under social studies requirements. Four states Alabama, Idaho, Illinois and New York require students to take a personal finance course before they graduate from high school. Minnesota, Mississippi and South Carolina require school districts to make such courses available to students, she said.

    But what Delaware’s Markell calls the “3 S’s” saving, spending and sharing (or giving to charity) doesn’t typically get a lot of classroom time. Cohen, a former state Teacher of the Year, said her award-winning personal finance program at Claymont Elementary School was dropped and her job eliminated when she retired this year to run the DFLI.

    “We have to find other ways to teach young people the basic principles of earning, saving, spending and investing,” said ASEC’s Blandin.

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