Money matters for students

Students in Camas High School’s Financial Fitness class huddled to craft campaigns touting the importance of saving.

Christine Moss, 17, and her group planned a video spot to explain the rule of 72 and other key formulas.

Jump$tart Coalition for Personal Financial Literacy offers these tips for raising a financially savvy child:

o Assign basic household chores. Even 4-year-olds can make their beds and pick up toys. Have a list of little jobs that small hands can do to earn a dime or a quarter. Provide a piggy bank for savings and sheets for easy record-keeping.

o Don’t buy toys on demand. Help your child to look forward to birthdays and holidays for special items.

o Set up a family change jar to save for a family treat.

o Talk to your children about the family budget. Include a discussion on wants and needs. Reinforce the learning process by budgeting for a family outing or purchase.

o Involve children in spending decisions by holding family meetings to talk about savings.

These students are up against the same challenge that confronts national financial-literacy efforts — how to make the lessons stick. As the nation’s economy wobbles in the wake of the Great Recession, economists and educators alike say it’s more important than ever that citizens understand the fundamentals of saving, investing and managing debt. But research suggests financial education might have to start at home and a heck of a lot younger than high school to have a lasting impact.

The term “financial literacy” was unheard-of when the nonprofit Jump$tart Coalition for Personal Financial Literacy began measuring it in 1997. Now April is “National Financial Literacy Month,” celebrated with such events as a visit to Woodland Intermediate School on Friday by Rob McKenna, Washington state’s attorney general.

Yet scores have fallen 9 percentage points since the Washington, D.C.-based coalition’s first survey. High school seniors who participated in the coalition’s 2008 survey, the most recent, received an average score of 48.3 percent, well below the 60 percent considered to be a passing score. The coalition estimates that three-quarters of young people are ill-equipped to make critical financial decisions.

Most high schools in Clark County offer some form of financial education, usually in a math class for students who learn better by studying applied rather than abstract problems. But Camas has gone one step further. It added Financial Fitness to its curriculum this semester in direct response to the documented decline in financial understanding. Camas High also offers a class in which students run a credit union branch, which opened with the newly built school eight years ago.

The district sought to equip students with knowledge of financial basics, said Linda Barnes, the district’s career and technical education director.

Camas teacher Melanie Clark has taken on the task.

“I want kids to have skills,” she said. “I grew up struggling. A lot of what I learned was from mistakes.”

Clark said she tried to protect her own children from financial worries.When she looks back, however, she wonders if she deprived them of a chance to learn about money. Her students’ parents walk a similar tightrope between protecting and educating.

Yet students are hungry for details about finances, Clark said.

“I’m just bombarded with questions,” she said. “Students are so engaged.”

She teaches them financial formulas and principles, but she also encourages them to reflect on their feelings about money.

“Money is not numbers. Money is emotions,” Clark said. “Every decision we make about money involves values.”

Perhaps that’s why Jump$tart hasn’t been able to turn financial literacy scores around.

“Almost all of us economists went into the field thinking we could teach this stuff and make a difference,” said Lewis Mandell, the University of Washington professor who wrote the Jump$tart study. “Chances are not good that we can ever create an enlightened citizenry who can analyze these very complicated, rapidly changing products. … If you have a course that’s one-off and not reinforced, you’re not going to remember it.”

He said behavioral economists are moving on to Plan B.

“If people are not capable of making very complex, very dangerous decisions for themselves, rather than allowing them to destroy their lives because they can’t cope with decisions, we default them into doing things that are good for them,” Mandell said.

He cited the 2006 Pension Protection Act as an example. It allows companies to automatically enroll their employees in a 401(k) retirement savings plan. Economists found that if employees must opt in, only a third will. But if companies automatically sign up employees, only a third will opt out — so twice as many people end up saving for retirement.

As for instilling a love of saving, research suggests that may work best at a very young age, Mandell said. Letting a 3-year-old play with coins and put them in a piggy bank may create lifelong positive feelings toward saving, he said.

The other approach that looks promising is educating adults just as they are preparing to make a decision — for example, a home-buying class just before a purchase.

“These are the two areas of greatest hope,” Mandell said.

Which isn’t to say high school classes are useless. They teach math and other skills that students can use immediately. Many of the students in Clark’s class work, pay for their cellphones and make car payments. Many are saving for college.

Several said the concepts they have learned in class have opened their eyes — like that rule of 72.

Divide 72 by the interest rate to figure out how long it will take savings to double. For example, a savings account paying 1 percent interest will take 72 years to double in value, whereas at 5 percent interest, savings will double in less than 15 years.

That made an impression on 17-year-old Kayla Garrett, a senior.

It’s a lesson a lot of us have learned the hard way.

“If I had started saving earlier,” she said, “I’d have more money right now.”