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Teach kids financial literacy

By Christopher Gergen and Stephen Martin
Special to the Observer

Growing up in Cincinnati, Nicole Lipp and her siblings received extensive instruction from their mother on saving money, balancing checkbooks and other financial skills. But when Lipp and her husband moved to Charlotte 10 years ago to work as public school teachers, it didn’t take her long to notice that most of her students were not similarly prepared.

“Many parents are more comfortable talking with their kids about sex than they are talking with them about finances,” says Lipp, who testified last month at a U.S. Senate hearing on students and financial literacy chaired by Sen. Kay Hagan.

That lack of education shows. A study by the Michigan Retirement Research Center found that barely a quarter of twenty-somethings understand basic financial concepts such as interest rates and inflation. A survey by nonprofit group Jump$tart reported that financial literacy scores had plummeted to their lowest levels in 12 years among high school seniors nationally. Not surprisingly, individuals who are less financially literate are more likely to face higher overall debt, unfavorable mortgages and large credit card balances.

Lipp is committed to breaking that cycle with a challenging personal finance course. Over the past several years, her students at Charlotte area high schools have been required to research salaries for entry-level jobs in their careers of choice and establish plans for living on that income. Students at Garinger High, which Lipp joined recently, will be the next to benefit from her crash course in opening bank accounts, paying rent, insurance and taxes and saving for retirement.

When it comes to financial education, Lipp has been way ahead of the curve. But the rest of North Carolina is catching up.

N.C. shows nation the way

Personal finance became part of the state’s standard course of study for public schools for the first time this school year, with the most intensive exposure occurring in a high school civics and economics class that is required for graduation. North Carolina, in fact, is one of only a handful of states to take major steps toward developing financial literacy in students.

The state’s leadership in this arena was reinforced last month when Sen. Hagan reintroduced the Financial Literacy for Students Act, which would establish grant programs for states that provide financial literacy instruction in elementary and secondary schools with large numbers of disadvantaged students.

Prepping students on the fundamentals of personal finance, however, is just half the battle. Teachers must also know how to convey these concepts to students – and a survey by N.C. A&T University found that just 20 percent of teachers in our state feel very competent in this regard.

Teaching the teachers

The N.C. Council on Economic Education has stepped in to help close that gap. Partnering with school systems and private industry, the Council last year arranged training sessions on teaching personal finance for more than 1,200 teachers across the state.

Eighty-seven percent of those teachers reported that the training improved their educational skills – and they in turn reached 144,000 students. That’s in addition to the thousands of students the Council serves each year through academic competitions, including stock market games in which students hypothetically invest in real companies.

In Wake County, the Council on Economic Education teamed this spring with Fidelity Investments on a series of daylong “Teach-a-Teacher” programs that prepared more than 100 educators to teach personal finance. The trainings leveraged interactive games and skits, small group learning and expert advice from financial professionals.

A long-term impact

Holly Laird, who teaches career and technical education at Leesville Road High School in Raleigh, attended one of the Fidelity sessions in February. She came away with several helpful resources, including a game that uses chocolate to teach trade and opportunity costs and a challenging virtual game that explores credit and interest. “We’re always looking for something new that we can bring back into class,” Laird says. Parents, too, can access numerous online games and other materials for teaching financial skills to their children in the “Resources” section at www.jumpstart.org.

Meanwhile, Sandy Wheat, the Council on Economic Education’s executive director, feels a strong sense of urgency to keep the momentum going. She looks back on how poor financial decisions, made by everyone from Wall Street elites to average homebuyers, snowballed into the epic recession that began in 2008.

“Financial education,” she says, “will go a long way toward preventing those kinds of events from happening again.”

Christopher Gergen is CEO of Forward Impact and an adjunct professor at Duke University. Stephen Martin is a director at the nonprofit Center for Creative Leadership. They can be reached at authors@bullcityforward.org.
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