Teaching Financial Literacy in Schools

Tuesday, July 17, 2012

U.S. Education Secretary Arne Duncan testifies during a hearing before the House Education and Labor Committee March 17, 2010 on Capitol Hill in Washington, DC. (Getty)

The 2008 financial crisis and the great recession exposed Americans' flawed understanding of personal finance. Little has improved in the last four years: Americans owe more than $1 trillion in student loans, along with $870 billion in credit card debt. Over 11 million American borrowers are underwater on their mortgages, meaning their loans cost more than their house is actually worth.

With these statistics in mind, the Obama Administration is making a push for financial literacy, starting with children as young as three years old. Secretary of Education Arne Duncan thinks it’s time for all schools to teach personal finance along with math, reading, and social studies. He thinks it's especially relevant in the wake of the 2008 financial crisis, with all its subprime mortgages and home foreclosures. "There's absolutely no doubt in my mind that if we had a more financially literate population, some of those horrendous things that happened to individuals and their families would not have happened," Duncan says.

Beth Kobliner, author of "Get a Financial Life" and a member of the President’s Advisory Council on Financial Capability, helped develop the Obama Administration's program on financial literacy. "The government here is essential in making sure that people don't sign that mortgage document 20 years from now because they never learned about this at school or at home," she says. 

The initiative is one of the first of its kind, as school curriculums rarely include extensive financial education. "You have many parents who just don't have experience themselves," Duncan says. "Where you have a parent who's working in the financial sector, that's one thing, but when you're working in the inner-city and disadvantaged communities, unfortunately, that's obviously not the norm."

Kobliner also highlights the importance of communication within the family concerning finances. "People are ill-equipped," she says. "They don't know how to talk about it." One of the tools that Kobliner has helped to develop is Money As You Grow, a website that features activities that help teach financial lessons to children ages 3-20. "We have to start talking about money," Kobliner says. "It's essential that kids don't get into the trouble we're in now when you're in your 30s, 40s, and 50s."

While the current political climate in Washington has made bipartisanship a difficult goal to achieve, Duncan believes that the initiative will go unaffected by the polarized atmosphere. "I think it's in the country's best interest to have a financially literate workforce and populace," Duncan says. "There's been very little pushback on this, if any. I think we have a long way to go as a country. I think everybody feels this sense of urgency, and so I think politics and ideology really don't have a role to play here."

Guests:

Arne Duncan and Beth Kobliner

Produced by:

Robert Balint, Ben Bradford and Jillian Weinberger

Comments [13]

Jesse Torres from Los Angeles, CA


I wanted to share this video that documents how we are using financial literacy as a tool to create a college-going culture in East Los Angeles. The link is: http://www.youtube.com/watch?v=rC2HrPnJppE&feature=plcp

Jesse Torres

Sep. 01 2012 12:10 AM
Barbara Smith

Why can't parents take responsibility for the financial education of their kids? It's so easy to use a program like KidsCash at http://kidsca.sh to help your kids learn how to budget their allowance.

Jul. 29 2012 05:00 AM
Elisabeth Donati from Santa Barbara

Financial education developed by a government that is seriously in debt will always be questionable in my mind.

Jul. 25 2012 02:54 PM
Rose Petraglia from Staten Island

Thank you for the outstanding interview with Secretary Arnie Duncan! We are so fortunate to have his leadership on these issues. Please continue to do more interviews for parents home with their kids during the summer and mention other help links that really work in developing Financial Literacy with children and adults. Please include Mayor Mike Bloomberg, and other financial leaders we look up too, and compare Singapore textbooks to ours in this area.

Jul. 21 2012 02:11 AM
Bobbie

Any financial education program requires knowledge, understanding, commitment and ownership. Studies show these skills are best learned in elementary school. The best way to learn is through experiential project based lessons. There is a program out that has been doing this quietly for 14 years, BizWorld.

Jul. 20 2012 12:20 PM
Larry Fisher from Bed Stuy, Brooklyn

I give my kids an allowance based upon what tasks they do around the house. They each have a piggy bank. Their piggy banks are often empty. I noticed this one day when I needed to do laundry and I was short a quarter.

I agree that kids need to learn about "the value" of money. I want them to learn that money is the modern tool for navigating through this life, but it is what you do with money that is important and not just making it.

Unfortunately, what happened on the paperwork for mortgages and Credit Cards was often abuse, and no one, I mean not even financial lawyers could make sense of it. So, I guess I will teach my kids to understand that if a deal sounds too good, it probably is not really a good deal.

I am also teaching them how to fill out lottery tickets: the winnings are their college funds.

Jul. 17 2012 11:54 PM
Wanda Thibodeaux from Eagan, MN

Getting on your feet in terms of financial literacy doesn't have to be complex. Bankaroo.com is a terrific site that is dedicated to improving financial education for kids and their families regardless of economic status. It is completely free to use! I'm sure this and similar sites can make a difference regardless of government initiatives.

Jul. 17 2012 06:16 PM
listener

Steve
"Maybe a little less time pointing fingers and compromise are also good lessons that should be taught"

Nothing but compromise with Pelosi and Reid in the first to years of the administration when trillions were spent with no serious budget to show how they planned to pay for it.
No amount of talking points and blind faith sophistry can compensate for this financial hole which makes them giving advice all the more laughable.

Jul. 17 2012 05:44 PM
Richard

Good idea - won't work. My question is how long has Arne Duncan been a financial planner? There are a dozen reasons this won't work not the least of which is that the government is running it and current programs have been less than successful - see below. But for one many of the parents don't understand financial planning and in most cases are not interested in learning "the rules" of financial planning or at minimum following them let alone making their kids do it. In addition, those who know the rules choose not to follow them. Two if it is "free" and there is no "up-front investment" there will be no appreciation for what it takes. I have experienced this teaching financial planning to military service members and their dependents. Few if any of the younger service members, especially, really have a desire to save and invest for the future and many do not appreciate the established programs. DoD has attempted these programs for years and their success rate is marginal to say the least and they're working with some of the most disciplined young Americans in our society. They've spent in excess of $12 million to date and their participation/success rates are less than stellar and certainly questionable. I also tried teaching high school students 15 years ago using the High School Financial Planning Program (HSFPP) started in 1984 in coordination with the Cooperative Extension Program and offered by the National Endowment for Financial Education. The class was a mixed (9 - 12) high school business course. Of the 20 students two were seniors and 3 were juniors. Only two of the upper classmen really took heart and listened - as for the other 3 and the 15 sophomores and freshmen it was a joke and a waste of time. If the government were serious they would review current programs. At minimum I would suggest perhaps begin at the senior year of high school or college level as the place to start but for the most part this is another thing the nanny state should stay out of and encourage parents to take responsibility. People have to want to change and can't be forced to the trough.

Jul. 17 2012 02:45 PM
Steve

Very good idea and a long time coming. It is good to see the administration to take a step in this direction.

The failure to pass the budget (mentioned by "listener") is the failure of the senate and house. The administration budget that as rejected 97-0 by the senate was introduced by republicans as a show of partisanship. Democrats did not vote for it for that very reason.

The national debt has been growing for years and is the responsibility of both parties. Maybe a little less time pointing fingers and compromise are also good lessons that should be taught.

Jul. 17 2012 12:18 PM
DLMC

Ironic. More college graduates = less financial literacy.

I agree that a short course in basic financial literacy could help many. But most of this boils down to the fact you can graduate college and not know enough basic math to balance a check book. Lets concentrate on providing everyone with sound math fundamentals.

Jul. 17 2012 11:14 AM
listener

The Obama administration is teaching students about money?
Isn't this beyond parody?

One administration budget was rejected by the Senate 97-0 and another rejected by the House 414-0.
The US Senate has not passed a budget in over three years and the debt is over 16 trillion dollars.

That sounds like two failing grades and an incomplete to name just a few failures from our new instructors on financial literacy.
Good luck explaining to students how much debt they are already responsible for thanks to this administration?

Of course no mention of any of this on a program that usually appreciates sardonic jocularity at the expense of politicians.

Jul. 17 2012 09:25 AM
fuva from harlemworld

Here's an official admission that citizens have been herded into 401Ks without preparation, as banks/ Wall Street was let loose to prey on us. This should be brought to justice.

Jul. 17 2012 08:20 AM

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