In the survey “The Financial Literacy of Young American Adults,” measured by the Jumpstart Coalition, high school students score just 48.3 percent. And while the average score for college students increases to 62 percent, the bad news is that since only 30 percent of students finish college, that means 70 percent of young people are likely to lack the skills to make good financial decisions.
Today, a Fair Isaacs Corp. score can be more important than an SAT score. A bad Fico score can change the trajectory of a young person’s life by restricting the capital resources needed to go to college, buy a car or access credit. In a recent Schwab MoneyWise survey, the majority of young people consider “making better choices about managing money” the single most important issue for individual Americans to act on today.
Clearly young people are focused on the weak economy and its effect on their future. And yet there is no clear path to learning about financial literacy throughout their educational career. Financial literacy is not required to be taught in Los Angeles or anywhere else in California for K-12.
Students who do participate in programs featuring budgeting, credit and credit abuse, the economic role of banking, saving-investing and understanding of capital markets improve their understanding and comprehension of these important topics by 30 percent or more. In addition, students uniformly vote with high marks regarding their interest in the topic, enthusiasm in pursuing additional learning opportunities and ability to relate the learning to their everyday lives.
April has been designated California Financial Literacy month to highlight the importance of financial literacy and encourage all of our citizens to increase their understanding of saving, investing and credit choices. I urge the business community of Los Angeles and citizens who care about better trained and prepared young people to support the efforts of organizations like the California Council on Economic Education and Assemblyman Hernandez’s AB 166, which provides a small step toward preparing our young people for the complex global economy that awaits them.
William Coffin is chairman of the California Council on Economic Education, headquartered in Los Angeles.