Financial Literacy Improves, But Not By Much

While financial literacy among high school students improved slightly in the last two years, most students still lack knowledge they may need to handle finances once they graduate, according to survey results for JumpStart Coalition for Personal Financial Literacy. Over 65 percent of the students who took the exam for the survey failed.

The survey measured scores of 4,000 high school students in 33 states, then compared the scores to surveys conducted in 2002, 2000 and 1997. On average, students in this year's survey answered about 52.3 percent of the questions correctly compared to 50.2 percent in 2002 and 51.9 percent in 2000. These figures compared to 1997 when 57.3 percent of students answered their questions correctly. The survey also found that:

1. Parental involvement plays an important role in financial education. Over 58 percent of students said they learned financial skills at home compared to 19.5 percent who said they learned such skills at school.

2. Students did a far better job of correctly answering questions about income (almost 63 percent answered correctly) and spending (55.4 percent) than they did about money management (45.4 percent) and saving (41 percent).

Nearly 78 percent of the students had a savings and/or checking account with a bank. The 22 percent who did not have accounts scored lower than those who did.

The survey results were released in April 2004, which was celebrated around the country as National Financial Literacy Month. According to JumpStart, though the survey revealed the need for education, the nation also has something to celebrate this year as interest in teaching financial literacy surged. There were 24 state bills, resolutions and proclamations addressing the issue introduced in the first quarter of 2004, the company said. At the same time, however, the organization also reported that only 15 percent of students in this country currently have access to personal finance education in schools. Financial institutions around the nation are working on the problem.

The national organization Operation HOPE launched the Banking on Our Future Call to Serve/Call to Action media campaign during the month, a challenge to the country to educate 5 million children in financial literacy in the next five years. The initiative, which is backed by a coalition of major banks and media organizations, will include a campaign of advertising in radio, print and billboards. It will also recruit 25,000 HOPE corps members to teach financial literacy in their communities.

In Michigan, credit unions recently teamed up with the Michigan Legislature to launch the "Financial Literacy Legislative Challenge." The initiative matches lawmakers with credit union volunteers as co-presenters of financial curricula in schools and student credit unions around the state. From April 22 to 30, credit unions and the Federal Reserve held more than 150 free financial education events for consumers in Metro Detroit alone.

Individual financial institutions are also taking action. As part of its commitment to Operation HOPE and literacy, Citigroup announced a 10-year, $200 million commitment to financial education both here in the United States and in the nearly 100 countries in which it operates. The financial holding company's foundation also will encourage its 275,000 employees to devote time to support financial education.

U.S. Bank, Minneapolis, Minnesota, announced that it was tackling the problem and celebrating the month by sending 140 of its employees to participate in the eight annual National Teach Children to Save Day, which was April 22. The employees covered topics such as budgeting, the difference between needs and wants, why it's important to save for emergencies and how interest makes money grow. The day is sponsored by the American Bankers Association.

Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 3, 7/05