As some of you may know, one of my passions is forwarding the progress of financial literacy in our youth, so much so that I am currently president of Connecticut Jumpstart (www.ctjumpstart.org), which is a non-profit of individuals and organizations that represents business, government, and education who have joined together to improve the personal financial literacy of Connecticut youth. Why this passion? My belief is that if we want to have a society that is less dependent/reliant on government, then we need to teach our youth the importance of savings, budgeting, credit cards, loans, and investments. I know as a parent, that we want our kids to grow up to be independent and make good quality decisions in their life (and financial life). So why don’t we have the same goal for our society? The cost of making a couple of bad financial decisions early in life can have lasting effects on these young adults. As Aristotle once said over 2,000 years ago, which still rings true today, “The neglect of education does harm to the political order”.
When I first joined this board seven years ago, the coalition was fresh off a defeat due to a bill that was pulled days before the general session to make personal finance a graduation requirement for high school students. Why was this bill, which makes so much sense, pulled? It was pulled for several reasons; the primary one being funding (of course).
So where are we now, seven years later in the quest for financial literacy? Before I answer that question, I want to give you some background on what other states are doing for financial literacy and some of the results that have been published. Based on a bi-annual survey of the states that came out last year, (www.surveyofthestates.com) 17 states now require high schoolers to take a personal finance course prior to graduation. Sadly, the number of states with this requirement has not changed in 4 years, and still stands at 17 (Connecticut is still not one of these 17).
The good news is that we are finally getting data on some states that have mandated financial literacy and its long term effects. Students who graduate with more rigorous standards are more likely to make on-time payments and keep up with their bills—they still use debt and credit, but seem to understand how to manage those obligations better than students who graduate with lower standards for personal finance and economics. The figure below shows the difference in credit scores for students who graduated before and after financial education mandates were imposed, relative to comparable states and controlling for local trends. Student credit scores are 8 to 17 points higher by age 22 in three key states that made a change in financial education policies in 2007.
So now that we know what some other states are doing, what is Connecticut doing? As of now, 90% of high schools OFFER a personal finance class, which sounds great, but after diving into the numbers the results are disappointing. The Connecticut Jumpstart surveyed the 136 Board of Educations in the state and found that only 7% (or 10 towns) have a graduation requirement in place prior to graduation (congrats to Cheshire, Granby, Groton, Middletown, Montville, New Fairfield, North Stonington, Seymour, Simsbury, and Stratford!). So that means in the towns where a personal finance class is offered, the class sizes are limited and most students get shut out of taking the class. Out of the 170,000 current high schoolers enrolled in CT, 78% of them (or approximately 133,000) will NOT take a personal finance course prior to graduation.
Another survey shows that 98% of parents believe that personal finance should be taught in the schools, yet we still have 78% of our kids coming out of high school with no financial life skills. When we do not teach children about personal finance – about managing household budgets or making informed decisions about larger investments in an education or a home – we are condemning them to learning it largely and perhaps entirely on their own, if at all. We are intent upon teaching them that worms are classified as annelids but we do not teach them why it is important to save for retirement. If we teach them subjects like science, history, and math but do not teach them anything about personal finance, then we need to understand that we are making a conscious choice to release them into a financial world where they have to fend for themselves.
Since budget issues in Connecticut have not gotten any better, the chances of a funded mandate for personal finance are slim to none. Therefore, our organization has made it a priority to go town-by-town and give local boards of educations the necessary tools and data to find ways to incorporate personal finance into the classroom. While we are making some progress (Bethel and Manchester are soon to add classes as a graduation requirement!) we still have many obstacles in the way. An example of this is the town of West Hartford, which has some pretty amazing personal finance educators already in place. A West Hartford student named Armani Nieves, who took one of the personal finance classes, decided to take it upon himself to make personal finance a graduation requirement and collected over 1,200 signatures from students and teachers in both high schools. He then presented it to the Superintendent whose answer was “By making everyone take this course, that means one less elective for each student”, and after much opposition with the local board of education, Armani’s personal mission was brought to a very frustrating end. This is just one example of the many obstacles in the way of bringing it into the classroom.
With that being said, our organization will continue to strive to reach as many students as possible and provide them with the skillset and tools necessary to achieve financial independence. Our goal is to give students the confidence and the peace of mind that the financial world is not booby-trapped with pitfalls that can ruin their lives. By closing the gap between what the financial world demands and what young adults understand, we will continue to bolster the financial capability in our state!