One of the most important life skills young people must have to function in our complex global and local economy has clearly eroded, with high school seniors averaging a failing score of 44 percent on a national survey of financial knowledge. It will not be enough to just raise awareness throughout April during Financial Literacy Month in California. Action is needed now.

A low level of economic and financial literacy is one of the reasons for the trap that many Angelenos find themselves in today as unemployment hovers around 12 percent in Los Angeles County. Costs remain high for food, health care and education – outside the reach of an even larger percentage of the population that doesn’t have the basic financial skills they need to fully function in an advanced society like ours. We must undertake a serious comprehensive campaign to improve financial literacy and it must start in kindergarten through 12th grade.

Economic and financial literacy reduces the exorbitant 25-plus percent high school dropout rate in the state by providing students a powerful rationale to stay in school and develop their human capital — the prospect of over $1 million more in lifetime earnings compared with a high school dropout. Students exposed to planning, budgeting, saving and investing skills generally develop higher levels of personal financial security and enhanced individual well-being. These are attributes that employers need.

Systematic training of students in financial literacy causes them to be less vulnerable to fraud and abuse, strengthening our economy in fundamental ways while directing resources to the greatest need and productivity. These same students are more likely to train for our highly technological information-oriented economy. An important byproduct of such skills is lower levels of personal bankruptcy and credit card abuse.

In spite of the stubborn grip of financial illiteracy on our society today, there are reasons for hope. For the first time in decades, the impact and aftermath of the Great Recession has focused more attention on financial illiteracy as a root cause that must be corrected. Here are three important “Big Ideas” that represent high impact at low cost in changing the trajectory of improved financial literacy in our society:

The first is the byproduct of the nonpartisan President’s Advisory Council on Financial Literacy chaired by Charles Schwab. A foundational recommendation that is taking root in educational policy in America is requiring schools to teach financial education in kindergarten through 12th grade. Standards-based financial education in the classroom helps to level the playing field for students whose parents may have faced financial challenges themselves or who may be among the unbanked or underbanked populations. This content can be built into existing classes such as reading, social studies and math. The path to financial literacy must start early and not be dependent on a small part of one class in 12th grade.

The second initiative is more local and comes in the form of a well-crafted California legislative bill being considered by the state Senate and sponsored by Sen. Ted W. Lieu, D-Redondo Beach, representing more than 1 million residents in senate District 28. Senate Bill 1080 was recently considered by the Senate Education Committee and approved on a bipartisan 9-0 vote. Specifically, SB 1080 would authorize school districts to provide instruction related to personal finances in economics curriculum as well as personal financial topics, such as budgeting, savings, and credit and identity theft.

‘Tools they need’

The bill also would require the state Department of Education to include financial literacy in the textbooks for mathematics and history-social studies. As Lieu noted in his comments in support of the bill, “I believe the teaching of financial literacy skills is vital to the equipping the young people of California with the tools they need to enter the work force.”

The last initiative is from the California Council on Economic Education, a leading provider of economic and financial literacy in the classroom. The initiative is introducing the most advanced online learning platform to teachers and students throughout California, allowing unprecedented access to best practice financial literacy content and educational materials. This platform, EconWorks, will be a game-changer in the campaign to improve financial literacy in the classroom.

Financial education is a key to reviving the American Dream for millions of California adults and young people. The overwhelming majority of people wish they were taught about money when they were younger. Let us use April 2012 to capture the initiative on this crucial life skill.

William Coffin is chairman of the California Council on Economic Education. He is the former chief executive of CCG Investor Relations in Los Angeles.

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