On Op-Ed by Julius Robinson and John Hope Bryant, special to the Los Angeles Watts Times
June 16th, 2011
Pop quiz: Name a subject students will rely on throughout their lives, but is hardly ever mentioned in the classroom? If you answered “financial literacy,” head to the front of the class. The shortcomings of our students in subjects like math and science have been well publicized, but just as troubling is the deficit of basic knowledge and good habits when it comes to money — skills our young people will require to enjoy fulfilling, independent lives. As we struggle to recover from this painful worldwide economic crisis, the need for sound financial education has never been greater. Regardless of one’s income, the ability to spend and save money responsibly, budget realistically and invest wisely are critical to everything from repaying student loans, buying a home, starting a business, and securing a comfortable retirement. Healthy spending and saving habits are developed early in life, yet according to a recent count only 13 states require high school students to take a semester of financial education. In many households, parents lack the know-how to impart financial skills to their children, and most schools are doing little to fill the gap. |
It should come as little surprise, therefore, that many of our young people are near bankruptcy when it comes to financial literacy. A recent national survey revealed that just 17 percent of high school students knew that stocks are likely to have a higher return than savings bonds, savings accounts and checking accounts over the long term, a fact that’s critical to building wealth. Here in California, high school students scored 65 percent last year on the U.S. Treasury Department’s National Financial Capability Challenge — barely a passing grade.
At the same time, spending levels remain high among young people, particularly credit card spending. A 2007 survey by Sallie Mae found that a majority of college students accumulate more than $5,000 in credit card debt while in school, and a third pile up more than $10,000 in debt by graduation day. Only 19 percent acquire no credit card debt at all. Without responsible habits and a firm foundation of financial knowledge, many young adults are finding themselves saddled with debt before their careers even get started.
Can our schools do more to address this clear need for financial education? We believe so, but at the same time we recognize the difficulty of that proposition. Teachers and administrators are under great pressure to prepare students for the various standardized tests, and subjects that don’t appear on the test win little study time in class. Add perennial budget pressures to the mix, and it’s little surprise that financial literacy has joined home economics and shop class as subjects that frequently fail to make the cut.
There is cause for hope, even in light of this current global economic crisis. Some blame for the crisis lies with the banking industry. However, responsible leaders in the industry are making sure it doesn’t happen again. A growing number of banks and financial institutions are teaming up with experienced nonprofit organizations to take on the challenge to make sure students are equipped to navigate the complex financial world and understand the “language of money.”
These innovative partnerships allow organizations like Union Bank, with thousands of financial experts on staff, to combine forces with community education groups, such as Operation HOPE, to deploy volunteers into schools and other places to teach a range of invaluable skills, from balancing a checkbook to evaluating a car loan.
No matter what dreams a child may have — whether it’s to study medicine, fly an airplane or run a corporation — the odds are good that achieving them will require some financial education along the way. We believe that for many students, financial literacy gives youth a practical aspirational tool that shows them that they can make their dreams a reality. Mixing the expertise of the banking industry with the passion for education so prevalent in the nonprofit sector is an enlightened combination that delivers results — we call on more of our colleagues to join us in promoting a truly enriching subject that will pay a lifetime of dividends.
Julius Robinson is Executive Vice President and Head of Corporate Social Responsibility at Union Bank. John Hope Bryant is the Founder, Chairman and CEO of Operation HOPE; he also serves as a member of the U.S. President’s Advisory Council on Financial Capability.