Financial Literacy

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.

For most children, an occasional game of "Monopoly" and a piggy bank stuffed with pennies is the extent of their early financial education. But Neale Godfrey's two children, ages 5 and 8, already have bank accounts, are saving for their college education with certificates of deposit and divide their weekly allowances among savings, charities, lunch money and funds for special purchases."