Ron Lieber of the New York Times was pitch-perfect in his piece over the weekend about the need for improving America’s financial literacy level (In College, Learning About Money). Lieber writes, “An education is one of the best defenses against financial flimflam, but many students never learn the things that help.”
He’s right on both counts. Just 4 states require high school students to take a one-semester course in personal finance, according the Jump$tart Coalition for Personal Financial Literacy. The rest of us leave high school, go to college or get a job and start learning about money through the school of hard knocks. That’s a painful and costly way to learn and, for far too many, means trashed credit scores that take years to repair.
The right personal finance education, delivered at the right time, to the right people, can make all the difference. It’s the financial literacy equivalent of getting an inoculation. It’s not perfect and doesn’t guarantee we’ll never fall victim to unscrupulous practices or our own fanciful logic too often applied to decisions around money. But learning about money management does give us the tools to more effectively ward off fiscal ills.
Lieber’s piece spotlights the encouraging work done by Champlain College to administer this financial literacy inoculation to their students. Focusing on core subjects, like understanding credit and employee benefits, Champlain’s “Financial Sophistication” program is forward-thinking not just in the kinds of material being covered, but also in requiring all students to take at least two classes before they graduate.
Visa is also stepping up to the plate to help colleges be part of the solution. Our free What’s My Score program provides, among other things, a plug and play personal finance presentation for college administrators, professors and peer leaders to use with students. This crash course in financial education comes with a guide book for each student to help them learn about the basics— from how bank accounts work, to decoding their credit report, to making a budget.
And just like inoculations that require booster shots, financial education isn’t a one-time learning. We need to demand that it be taught in high schools and colleges. And we as parents need to have the “money talk” with our kids early and often.
Only then can we begin to reduce the financial illiteracy infection rate.
Posted by: Jason Alderman, Visa Corporate Relations on January 14, 2011 at 9:50 am