Currency events

State should ensure that every student in Maryland has basic financial literacy

February 10, 2010|By Peter Franchot

Financial Literacy: Key to Our Children's Future

As the nation slowly recovers from the worst recession since the Great Depression, states across the country are looking for ways to better protect themselves from future economic downturns. While long-term economic development planning is vital, perhaps the most effective tool Maryland can use to combat future downturns is to take the important steps necessary to educate our children in the basic principles of financial literacy.

Our national economic crisis has painfully reminded us that far too many Marylanders lack an adequate understanding of the proper use of credit, the risks of excessive debt, the principles of sustainable household budgeting and the importance of saving for the future. Thus, in far too many instances, we entered into financial commitments that we couldn't afford, with terms and conditions that we didn't truly understand, in order to buy things that we really didn't need. If more Marylanders had the benefit of sound financial literacy education, fewer of our friends and family members would be facing the loss of homes and life savings today.

That is why I am urging all Marylanders to support legislation introduced in the General Assembly that would require Maryland high school students to complete a stand-alone course in financial literacy to graduate from high school. This legislation (Senate Bill 264 and House Bill 335) would complement efforts by the Maryland State Department of Education to include financial literacy content, starting in elementary school and continuing through middle and high school.

Financial literacy is an education-reform and consumer-protection initiative that crosses traditional partisan and regional divides. The co-sponsors include both Democratic and Republican lawmakers. Supporters include educators, business leaders and consumer protection advocates, all of whom have been forced, in one way or another, to confront the devastating effect that the economic crisis has had on vulnerable families.

Financial literacy is the key for future generations to understand the immediate and long-term repercussions of impulse buys. As families and businesses are forced to tighten their belts to make ends meet during the recession, children need to learn how to plan for a career, earn an income and save money. This means teaching common-sense principles, from balancing a checkbook to creating a budget.

According to the national Jump$tart Coalition for Personal Financial Literacy, three states - Utah, Missouri and Tennessee - have established a stand-alone course requirement, while 18 other states have taken the intermediate step of including financial literacy in other course requirements. But Maryland has no financial literacy requirement - an uncommon oversight for a school system that is justifiably regarded as one of the nation's most innovative and was recently confirmed as the nation's best by Education Week.

Carroll, Talbot and Allegany counties have implemented a stand-alone course graduation requirement, while three other counties - Baltimore, Harford and Garrett - have included financial literacy topics into courses that almost all students are required to take for graduation. While other schools across the state offer some form of financial literacy courses as electives, Maryland still risks falling behind our competing states if we fail to ensure that all of our graduates will enter the "real world" with these practical guiding principles.

During the past year, I have visited schools from Western Maryland to the Eastern Shore and everywhere in between. I have talked with students in finance academies, business classes and financial literacy courses, as well as their parents and teachers. The feedback I've gotten has been unanimous - they know that financial literacy training works and that students who have received it will go on to college or enter the job market, with a decided advantage over those who haven't. In many instances, the students told me they were now teaching their parents the principles and techniques they learned in school.

School officials also agree that financial education doesn't have to be cost-prohibitive. For instance, by using current teachers and taking advantage of the low-cost training and materials donated by organizations like the Maryland Coalition for Financial Literacy, Carroll County created financial literacy graduation requirements for all of its eight high schools at a cost of $37,500. These costs will be significantly lower in future years.

Financial education doesn't have to be cost-prohibitive, but lack of it will be costly to future generations in the long run if students don't understand basic money decisions and fall into the same traps that helped exacerbate the current recession.

Peter Franchot is the comptroller of Maryland. His e-mail is

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