Learning Dividend

Campaign: Maryland business and education leaders seek to make a personal finance course a prerequisite for graduation from high school.

Financial Literacy

November 04, 2003|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

Too many Maryland residents know next to nothing about personal finance, and they're passing that dangerous defect along to their children, business and education leaders say.

To help solve that problem, they are proposing that students be required to pass a personal finance course to graduate from high school.

Only Baltimore County has such a requirement, but if the organizers of the financial literacy effort have their way, districts across the state would begin requiring personal finance courses.

The Maryland Coalition for Financial Literacy, a new offshoot of the nonprofit Maryland Council on Economic Education, plans to work county by county to persuade schools to adopt the financial literacy requirement, organizers said.

The campaign is expected to be announced today at Towson University.

The council will help school districts develop personal finance curricula, train teachers and supply educational materials.

The devastating consequences of economic ignorance for families across Maryland prompted the coalition to act.

"One-third of all retirees are trying to survive on just Social Security because they had no financial plan in place for retirement," said Carol Jarvis, executive director of the Maryland Council on Economic Education.

"So many families are living paycheck to paycheck," Jarvis said. The average American family's net worth - assets minus liabilities - is less than $10,000, she said.

Mary Louise Preis, a former Maryland commissioner of financial regulation who spearheaded the effort to form the coalition, said her office has received thousands of complaints each year from consumers, many of whom lacked the information needed to make wise financial decisions.

"So many young people are filing for bankruptcy," she said.

Parents and teachers are no better off than children when it comes to understanding what it takes to manage money, the experts say, and they call the ignorance of the children a disaster in the making.

Last year, the average score of 1,500 Maryland high school students who took an online financial quiz prepared by the Maryland Bankers Association was 57 percent.

(A copy of that quiz accompanies this article.)

Nationally, students scored worse. In 1997, the national average score on a personal finance quiz given to seniors was 57 percent. Last year, it dipped to 50.2 percent.

Despite those numbers, only eight states have acted to require any personal finance in their public school curriculum, said Dara Duguay, executive director of the Washington-based Jump$tart Coalition for Personal Finance Literacy.

Maryland requires economics, basically fiscal and monetary policy, to be taught as a component of public high school government classes, Jarvis said.

That means many Maryland teen-agers are entering adulthood without any formal instruction in basic life skills such as handling credit cards, investing for retirement, buying a home or renting an apartment, experts said. At the same time, finances are becoming more complex and individuals are expected to shoulder more financial decisions.

Many parents aren't teaching those lessons at home, experts said. "They are not doing a good job, quite frankly," Duguay said.

Coalition organizers acknowledge it will some time before personal finance becomes a required course. School districts are already burdened by an increasing number of federal and state mandates. Teachers, too, need training in personal finances.

"The problem is teachers are not prepared to teach personal finance or economics," said Charles Ecker, superintendent of Carroll County schools. "They were never taught in school. It's a vicious cycle."

Carroll County high schools will be teaching personal finance next year as an experimental elective, he said.

Ideally, Jarvis said, new personal finance courses will be taught to juniors or seniors, close to the time when they will be on their own and need the lessons.

Baltimore County school officials said the personal finance course taught to seniors there has become a success in the two years it has been required.

"The kids really like it; it's real to them," said Nancy Boyd, coordinator of social studies for the county public schools.

Lessons include the importance of starting to save early, the impact of a college degree on income and how many decades it would take to pay off a $2,000 stereo by making only minimum payments.

Boyd said the lessons appear to be working. Parents report that teen-agers are reading the stock market pages and are saving money, she said.

Test your financial wits

1. Karen wants to have $100,000 in 20 years. The sooner she starts to save, the less she'll need to save because:

a. The stock market will go up

b. Interest rates will go up

c. Interest on her savings will start compounding

d. Don't know

2. What does a budget help you to do?

a. Stay in control of your money

b. Plan for purchases and pay for them later

c. Prepare you for unplanned expenses or emergencies in the future

d. All of the above

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