Financial Literacy

The conventional wisdom is that allowances make children responsible money managers as they learn to budget so they don't run out of cash. But Lewis Mandell, professor emeritus of finance and former dean of business at the State University of New York in Buffalo, says that's not always the case. In fact, says Mandell, who has studied financial literacy, certain allowances may even be hurting kids. According to Mandell, high school students who didn't get an allowance performed better on a financial literacy test than those who did, especially teens who received stipends with no strings attached.

After school three days a week, Alexis Corbin, 16, a junior at Carver Vocational-Technical High School, walks the short distance to Coppin State University. There, she and 10 other students participate in the Comcast Digital Connectors Program at the Coppin Heights-Rosemont Family Computer Center on campus. They learn about computers, financial literacy and leadership, and in turn bring their knowledge to the community, by leading classes on such topics as how to use social media, operate cell phones or create website pages.

With a heap of recession-era tales of woe stoking people's financial fears, a free workshop for parents and teens seems like a good way to prevent costly mistakes by a generation coming of age in wildly uncertain economic times. That's just what Making Change Center has in mind as it prepares to host the second annual Howard County Passport to Financial Literacy on Feb. 5 at Howard Community College. Sponsored by the nonprofit organization founded in 1991 by former HCC President Dwight Burrill and now run by his daughter, Michelle Glassburn, the self-guided tour takes teens in middle and high school to 20 stations.

Some foreign-born students at Howard Community College enter professor Mary Beth Furst's business class, sit attentively through instruction and say next to nothing. Furst said that when they are called upon, "You would think they were going to die, because they're really uncomfortable speaking up. " She recently discovered one of the reasons behind the silence: Some students hail from countries where it is disrespectful to ask an instructor a question. Furst and other HCC faculty and staff are learning about the college's ever-diversifying student population — and coming up with better ways to break down cultural and communications gaps — through a professional development program called INSPIRES Global Perspectives.

When graduates of the National Academy Foundation interview for jobs in the financial world, some will have an advantage unlike students from any other school in Baltimore: They'll be able to cash in on years of experience operating a fully functioning branch of a city credit union. For more than two years, the South Baltimore high school has housed a branch of the Municipal Employee Credit Union, carrying out the day-to-day duties of opening accounts, taking deposits and dispensing cash for members of the school community.

Comptroller Peter Franchot has been going back to high school as part of his push for requiring that seniors take a course in financial literacy in order to graduate. The proposal for a graduation requirement has met with resistance from lawmakers and educators who are wary of imposing curriculum mandates, but Franchot said the recent recession has convinced him that basic personal finance concepts must be taught. Franchot, the state's chief tax collector, has visited seven high schools since the school year began and plans to push for legislation during the General Assembly session that begins in January.

YOU DON'T hear many good things about Enron Corp. these days. But if there's one positive aspect, says AARP's president, it's that the Enron debacle has highlighted the need for Americans to understand the investment process. Numerous studies and surveys in recent years have revealed that Americans' financial knowledge is inadequate for a world where they must fund their own retirement and face a growing choice of mortgages, credit cards and investments. The consequences of not knowing financial basics are costly, according to statistics compiled by the Senate Committee on Banking, Housing and Urban Affairs: As many as half of those who borrow from subprime lenders could actually qualify for cheaper conventional loans.

Alarmed by statistics that suggest high school graduates lack a basic knowledge of money management, Carroll County school officials want to join a handful of other local districts that require students to pass a financial literacy course to graduate. "Some kids think you don't have to pay a credit card back because their parents get the bill and pay it," Carroll Superintendent Charles I. Ecker said yesterday. "Kids are not learning about financial responsibility [because] a lot of parents don't know how to manage money."

Carroll County's school board members largely support teaching financial literacy to teens, but some question a proposal to make it a graduation requirement. Citing statistics that indicate many students are graduating without basic knowledge of money management, local school officials, including Superintendent Charles I. Ecker, want to require students starting ninth grade in 2007 to pass a half-credit financial literacy course to graduate. But school board members, who said they see the value of teaching teens about financial matters, pondered the merits of the proposed requirement during last week's board meeting.

Carroll County students will be required to take a "financial literacy" course to graduate, despite an effort at last night's school board meeting to quash the proposal. Board members voted 4-1 to require students beginning next school year to take the half-credit course that will cover concepts such as money management, consumer rights and responsibilities, credit, savings and investing. Carroll joins a handful of Maryland school systems -- including Harford, St. Mary's, Talbot and Baltimore counties -- with a similar requirement.

The age of majority in Maryland is 21. That's when childhood and adolescence officially end. But just because a young person reaches that age doesn't mean he or she is prepared to undertake all the responsibilities of adulthood. And the difficulties faced by youths venturing out into the world for the first time are only compounded when they have grown up in foster care without a family to call their own. Few young people are really prepared to make their way independently at that age, even if they have been lucky enough to have loving parents, a stable home, a fine education and opportunities to participate in sports, social events and other activities.

Baltimore police arrested five people last week accused of impersonating city tax collectors and going to the homes of elderly residents to rob them. These are disturbing allegations. But apparently, scam artists who pretend to have ties to the government so they can take advantage of older consumers aren't all that rare. That's what senior advocates are telling the Consumer Financial Protection Bureau, the federal agency with a mandate to promote financial literacy among those 62 and older and protect them from fraud and abuse.

Alas, sisters, a study by the FINRA Investor Education Foundation finds that men are better users of credit cards. The survey, which polled about 500 people in each state and D.C., found that Maryland men are less likely to carry a balance, pay only the minimum or owe late or over-the-limit fees than women here. For example, 55 percent of women polled in the state carried a balance on their cards, compared with 47 percent of men. Thirty-four percent of men paid the minimum due; compared with 41 percent of women.

Central Library 10375 Little Patuxent Pkwy., Columbia. 410-313-7800. •All Together Now. Saturdays, 10:15 and 11:30 a.m. All ages; 30 minutes. •Book Boosters. Wed., April 4, 7 p.m. Discuss latest reads and hear suggestions from fellow book lovers. •Eclectic Evenings. Second Tuesdays, 7 p.m. •English Conversation Club. Mondays, 10 a.m.; and Thursdays, 7:30 p.m. Practice speaking and understanding English in a group setting.

Thanks for your insightful front-page story on the increasing homelessness among Maryland youths ("Homeless student numbers growing," Jan. 22). Your story sheds light on a largely unseen, deeply troubling problem of which we are keenly aware. Of as great concern as what homeless youth experience during the winter months is what they endure during the long, hot summer days when school is out. Shelters typically are closed between dawn and dusk during this season, and these vulnerable young people are often left to fend for themselves.

The conventional wisdom is that allowances make children responsible money managers as they learn to budget so they don't run out of cash. But Lewis Mandell, professor emeritus of finance and former dean of business at the State University of New York in Buffalo, says that's not always the case. In fact, says Mandell, who has studied financial literacy, certain allowances may even be hurting kids. According to Mandell, high school students who didn't get an allowance performed better on a financial literacy test than those who did, especially teens who received stipends with no strings attached.

More high school kids are flashing credit cards. But don't ask them about the dangers of running up big debt. That's the gloomy conclusion of the latest test of high school seniors' financial literacy, which found two-thirds failed to get a passing grade when asked about managing their finances, organizing checkbooks and knowing the investment value of stocks. Just 32 percent passed the nationwide test, which was administered during the winter to 4,000 students. The average score was 50.2 percent, a six-year low. "They are only getting half the questions right in a nation where one-third of the high school seniors already use a credit card and half have access to an ATM machine," said Lewis Mandell, economics professor at State University of New York, Buffalo, who administered the test.

Lime Kiln eighth-grader Clare Napoli set out to be a big spender, envisioning herself with an expensive house and a sporty Ford Mustang. Then the Junior Achievement online economics education program, called JA Finance Park, gave her a virtual identity, and Napoli discovered that she was a parent of two children. "It told me that I should plan better because I have to pay for their education," said Clare, who with other Howard County eighth-graders is using JA Finance Park as part of their consumer science curriculum.