Financially Literate Teens
Kids generally get a bad rap when it comes to their knowledge of personal finance. In the 2008 survey of high school seniors by the Jump$tart Coalition for Personal Financial Literacy Financial literacy is the ability of individuals to make appropriate decisions in managing their personal finances. Raising levels of financial literacy is now a focus of government programmes in countries including Australia, Japan, the United States and the UK. , the average score was 48%, down from 52% in 2006.
So it's nice to be able to salute students for their proficiency pro·fi·cien·cy
n. pl. pro·fi·cien·cies
The state or quality of being proficient; competence.
Noun 1. proficiency - the quality of having great facility and competence in money matters. In the first-ever National Financial Literacy Challenge, sponsored by the U.S. Treasury U.S. Treasury
Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. , ten regional winners from around the country were honored hon·or
1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate.
a. Good name; reputation.
b. with scholarships from the Charles Schwab Charles Schwab can refer to:
Separately, more than 20,000 high school students in 20 states took the spring 2008 Financial Literacy Certification Test, sponsored by the group Working In Support of Education (www.wise-ny.org). After studying a personal-finance curriculum for a minimum of seven to eight weeks, about 74% of the students were able to pass WISE's proficiency exam.
Part of the challenge in testing kids on their financial knowledge is coming up with the right questions, and how much teenagers can reasonably be expected to know is a topic in itself. It seems to me that the questions should be simple, straightforward and practical.
When I asked my 19-year-old son to take a look at a few sample tests, he had some interesting observations.
For instance, he thought it was more important for students to understand how homeowners insurance works than to know the definition of a deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). . He liked a question that compared a pay hike of 3% with a 5% inflation rate because it helped him figure out whether a 25-cent increase in his hourly salary was a "real" raise.
Similarly, he knew that a person who paid only the minimum on a credit-card balance would end up paying the most in finance charges, and he found that information useful.
But he didn't think most teens would intuitively know what it meant to "diversify diversify
To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. " investments with a mutual fund, or "hedge" inflation by taking out a fixed-rate mortgage (many adults would probably have trouble with that one).
Of course, kids can (and do) learn about all those things as they get older. For the first time, the Jump$tart survey was also given to college students, who scored an average of 62%.
Jump$tart has a wealth of curriculum material available in its clearinghouse clearinghouse
Institution established by firms engaged in similar activities to enable them to offset transactions with one another in order to limit payment settlements to net balances. (www.jumpstart.org), much of it free. But there are no uniform requirements for financial education, and teachers have a lot on their plates. So what's taught in schools often depends on the time, interest and expertise of individual schools and teachers.
Most important, surveys consistently show that kids still learn most of what they know about money from their parents.
Next week: Six skills kids need to learn before they leave home.