Teaching the Foundations of Literacy

Teaching the Foundations of Literacy

"45% of college students have an average credit
card balance of $3,066"

Financial Education: Teaching the Foundations of Success

To raise public awareness of the growing financial problems that
our young people are facing, the United States Senate designated
April of 2003 to be "Financial Literacy for Youth Month" (S.RES.48).
The Senate Resolution lists some sobering statistics:

Consumer bankruptcies increased 19 percent in 2001, from the
year prior.
Foreclosures have reached the highest rate in 30 years.
83 percent of college students have at least one credit card.
45% of college students are in credit card debt, with an average
balance of $3,066.

In addition, only 26 percent of the 13 to 21 year-olds have parents
who took an active role in teaching their children how to manage their
money. Without proper financial education, many young people live
with substantial debt, poor credit and years of stress and anxiety.

To help students survive financially, it is recommended that students
have an understanding of the foundations of financial management
before entering high school. Those foundations include:

Long Term Planning. A student should understand why and
how to plan for future goals, such as a new computer, vacations,
cars, college education, starting a family, purchasing a home or
planning for retirement.

Types of Income. Knowledge of how money is earned, including
money earned from work, rental property, interest, dividends and
investments will provide a foundation for creating a budget. Students
will learn the relationship of continuing education, work and
entrepreneurship to their financial future.

Budgeting. Teaching students how to understand their cash flow will
help them manage their money properly. They will learn how to identify
expenses and make appropriate financial choices.

Risk versus Reward. To avoid poor credit, anxiety and stress, students
should be exposed to the consequences of making poor purchases,
investments or using credit cards to their extreme.

TEACHING TIPS:

Teaching the fundamental skills to develop sound financial management
does not need to be time consuming or expensive. With creativity and support
from parents, teachers could use the following ideas to teach and reinforce a
student's financial skills:

Career choices. To help students understand the impact of their educational
choices and the effect of their employment opportunities in the future, ask local
speakers to visit your classroom and discuss their careers. Take a field trip to a
college or college fair to explore educational and career opportunities.

Balance a Checkbook. Teach children how to write out checks, pay bills and
balance a checkbook. A complete lesson plan is available for about $10 from

Budgeting. Have students complete a chart of their expenses. Each time a
child purchases a product or service, have them write down the cost and the
item on a special chart. At the end of 12 weeks, review common expenses and
methods of saving money.

Becoming an educated consumer. Teach your students the value of their money,
as it relates to the value of products and services. Simply having your students
clip coupons, compare prices on products and teaching them how to conduct
research could save them hundreds of dollars each year.

Timothy Liptrap is the Vice President of Education and Development for the
101 Financial Lessons newsletter (http://www.101financiallessons.com) and
co-author of the ebook Twelve Weeks to Financial Success.

Teaching the Foundations of Literacy

"45% of college students have an average credit card balance of $3,066"

"45% of college students have an average credit
card balance of $3,066"