By: Dana Parsons
March 7, 2010
Kelsey Steinke thought of herself as a fairly bright college student -- except when it came to managing her finances.
"I knew very little," she said.
Compared with some of her peers, however, she was a prodigy.
"I mean, there are some girls who don't know how to do laundry," she said. "If they can't do their laundry, how can they handle their finances?"
That less-than-kind reality, coupled with a troubled economy that has frightened even the experts, has spurred renewed interest in teaching financial literacy to students in high school and college and even earlier.
It persuaded Steinke, a sophomore at Chapman University, to take a class from Union Bank Vice President Pierre Habis, who taught the semester-long class for a dollar. It also led Irvine, Calif., to offer a summer program for high school students on the elements of finance. And more states are including personal finance study as a high school graduation requirement.
"I've been a financial literacy advocate for some 16 years, even before financial literacy was Google-able," said Kathy Griffin, founder of MoneyU, an online game-based program. "I've watched the problem go from bad to worse to even worse in that time."
Though some high schools and colleges have offered courses in personal finance, "the financial landscape has become a lot more complicated now," Griffin said. "It's a difficult subject to teach."
She's not suggesting that high school or college students need to understand collateralized debt obligations or reverse mortgages. But how about the ins and outs of credit card debt? Taking out a loan? Opening a savings account?
Habis began discussing the class with university officials a year ago. Even at the bank, he said, young employees weren't putting two and two together.
As an example, he said, people in their 20s left for other jobs for minimal pay increases, largely because they thought the move would help pay off their debts. The better long-term play, he said, would have been to stay at the bank.
Still, Habis said he was surprised by the gap between what he thought his students would know and what they actually knew.
He and the students "had self-discovery about how much they didn't know," he said, and slowly worked "through that gap together."
Steinke says the class helped.
"I just wanted to learn how everything works," she said, noting that a personal loan contract sounded as if it were written in a foreign language. "When I was reading it, I had no idea what they were talking about. I was just so confused. I just wanted straight answers, and I couldn't find any. I knew I had to figure it out myself, so I signed up for the class."
Louis Polak, another sophomore who took Habis' class, thinks he has a leg up on some of his peers.
"I was pretty surprised," he said, "to find that my roommate just recently started banking and really had no sense of how to bank, how to write a check, how to deposit money. Just simple things I thought everyone knew."
College students "just don't really know they're hurting themselves by not knowing about this," Polak said. "No one's ever told them what's going to happen to them in the future to give them an idea of how important it is to start right away."
Polak's parents opened a bank account for him when he was young and emphasized the importance of saving. He thinks high school would be a good time to expose students to the rudiments of personal finance.
Amen, says Griffin, noting that only seven states require some financial education as a graduation requirement.
"Young people have access to credit and loans now more than ever," she said, "and it's not good to graduate ... deep in debt. We need a strong, taxpaying middle class, and today's young adult is the next middle class, and we don't want all those folks on the dole and in student loan default."
The sometimes frightening economic news of the last two years should have sent everyone a wake-up call, Griffin said.
"The worst case happened, and it didn't affect just young people but their parents as well," she said, adding, "It doesn't take financial mastery to be able to be financially self-sufficient."