President’s Advisory Council on Financial Literacy
As our nation's financial troubles continue to worsen, more elected officials, business leaders and other policymakers are realizing that lasting solutions will not be possible without a redoubling of our collective efforts to improve our nation's abysmal financial literacy rate.
Most recently, President Bush established the President's Advisory Council on Financial Literacy (http://www.treas.gov/offices/domestic-finance/financial-institution/fin-education/council/index.shtml), a group of eminent leaders in the business, faith-based, and non-profit sectors pulled together to provide meaningful solutions to address this our collective financial illiteracy. The council is another step in the right direction and underscores that concern about our nation's financial illiteracy has reached the highest levels of government and business.
The presidential panel is the latest addition to a number of existing initiatives that include the Treasury Department's Financial Literacy and Education Commission (http://www.treas.gov/offices/domestic-finance/financial-institution/fin-education/commission/), the National Council on Economic Education, and scores of state, regional and non-profit initiatives. While this growing interest in solving the financial literacy mess is welcomed news, it is critical that all of these initiatives be coordinated and evidence-based if we are to achieve any meaningful and measurable results.
At Networks Financial Institute at Indiana State University, we've been addressing financial literacy, largely in the state of Indiana, for about 5 years now. When we first began, our baseline research indicated that about half of all Indiana students in grades kindergarten through 12th received no formal financial literacy education.
In our race to focus on equally important priorities such as advanced math and science education, we appear to have neglected a fundamental subject of financial literacy, and we as a nation are now suffering the consequences through the residual impacts of the sub-prime mortgage implosion and other financial messes resultant from decisions made by under and uninformed consumers.
To address this concern, NFI designed a comprehensive evidence-based financial literacy curriculum called Kids Count on the Money Bus (http://www.moneybus.org), targeted initially to underserved students in grades 3 through 5. The curriculum is mapped to academic standards and is designed for seamless incorporation within the general curriculum. Importantly, the curriculum also targets the families of the students who similarly suffer from a lack of financial literacy. Over the past 2 years, this NFI program has touched more than 10,000 school students and their families, and has attained measurable progress.
Like literacy itself, it is imperative that financial literacy be viewed as a lifelong learning endeavor that should be taught at the earliest possible age and be reinforced through continued exposure in both the school and home. Any national recommendations from the advisory council or other bodies must recognize that financial literacy is a continual process and not merely a box that is checked off when the required unit is completed at week's end.
We all know what often happens when students stop learning a given subject - they forget it unless the information is continually built upon and reinforced. We as a nation simply cannot afford for our students to lose their financial literacy knowledge, especially as they age and begin to make financial decisions (car loans, college loans, living expenses) that if unsound could have long-lasting negative ramifications.
We also caution leaders from presuming that curriculum focused on economics or other related issues is sufficient to meet the need of sound financial literacy education. While economics and other topics should most certainly be taught and may provide excellent toeholds to introduce financial literacy to the classroom, relying on existing instruction devoid of financial-literacy specific curriculum will not bring us any closer to a solution.
Establishing local or regional financial literacy councils helps bring the broader community - especially parents - into the equation and should also be part of a national solution. Just as the President's advisory council is seeking to do nationally, the local or regional councils would task a group of similarly focused experts to continue this work on an ongoing basis.
Perhaps most importantly, any national recommendations and guidelines must focus on professional development to ensure our classroom teachers are well-prepared to teach financial literacy. Just as no parent would want a teacher unskilled in math teaching calculus, we should have no less of a standard when it comes to financial literacy.
Unfortunately, our own research shows that less than 40 percent of classroom teachers throughout the nation consider their own financial literacy to be "very good" or better (http://www.networksfinancialinstitute.org/Lists/Publication%20Library/Attachments/86/2007-NFI-03_Godsted-McCormick.pdf). To expect these teachers to educate our children on financial literacy without providing the resources and training needed to improve their own knowledge would bear little to no fruit.
Along with the focus on professional development, a meaningful financial literacy initiative must also include metrics for determining success. Without regular and thorough evaluations, we will have no way of knowing what is working and what is failing.
We applaud the President for stepping up to recognize the degree of financial illiteracy in our country and for taking action aimed at solving this problem. While decades of neglect cannot be reversed overnight, a concerted effort aimed at infusing our classrooms with evidence-based financial literacy instruction that works will surely help us spare future generations from similar financial harm.