A New Take on Financial Literacy

Think back to the useful skills that you learned as a child. Was managing your finances one of them? If you're like most Americans, the answer is probably no. Instead of growing up and learning how to manage money, avoid debt, and live free of financial worry, Americans have a fairly dismal financial outlook. One study shows that only about 30% of Americans have a financial plan that includes savings and retirement goals. Another shows that about 50% of American households have less than $500 in emergency savings. That same report, not surprisingly, found that about 50% of Americans are anxious or fearful about their financial well-being.

And not only are budgeting and daily expenses an issue for most Americans, but debt is a huge concern. About 17% of Americans have student loan debt while 63% carry credit card debt. We know that in order to afford most post-high school education our students will need to take out loans. In 2016, graduates were almost $40,000 in debt. And once student loan repayments began, the average monthly cost was about $350. Of course, you probably know all of this. Many teachers carry student loan debt from both undergraduate and graduate degree programs. So how can we help our students take a different path toward financial well-being than we, and most of the adults around them, have?

Skip Traditional Financial LIteracy Programs

The answer to helping our students may not lie in the most obvious of places. As teachers, we immediately think education is the answer to most of life's problems. However, it has been shown by at least one study that learning from financial literacy programs as a student has very little impact on future behaviors. In fact, the study shows that within 20 months of finishing the program, nearly every participant has forgotten what they've learned.

Does that mean you shouldn't teach students the basics of savings, investing, and budgeting? No. Because in the end, most Americans are completely uninformed about their finances. It’s not that teaching students about checking accounts, savings, retirement, debt, and other money matters isn't important, it just may not impact financial choices later on.

What to Do Instead

So, if the financial literacy program that your school hands you to teach doesn't produce useful results for your students in the future, what are you supposed to do? Luckily, there are some strategies that you can use with students now that will stick with them enable them to make better financial choices in the future.

• Teach students where to get information when they need it. Just-in-time learning is how most adults can make good decisions about money. What this means is that before they take out a car loan, they take a short course from a lending institution or they meet with a loan Consultant to learn about all of their options. Teach students about the resources that exist now so that they know where to look in the future.
• Make the learning personal.Some banks and credit unions work with schools to put on financial reality fairs. Students role play scenarios in which they use the money smarts they’ll need later in life. These fairs are a good start, but there are more authentic ways to get kids using financial literacy and knowledge right now-- support their entrepreneurship. Young people today are starting businesses all the time. They have great ideas about how to fix problems. So, start business fairs or engage in entrepreneurial learning and have students learn about money from a business perspective.
• Build skills that help financial literacy. Just because games and fake checking accounts don’t really help students remember how to make financial decisions doesn't mean that the other content you teach can’t help in the future. Students with great reading, writing, and digital literacy skills will be able to learn about their banking and investment options by reading articles, watching videos, and writing up questions they have. Basic math skills are clearly related to a solid financial future. Even government and American History classes can help students understand why the financial system is the way it is. This can give them the upperhand when it comes to investing and avoiding debt in the future.

Financial literacy programs should evolve as technology does. Students don’t need to spend time playing with paper money. They need real experiences to teach them how to find the financial answers they seek. Lots of early experience making good and impactful financial choices will make a difference in your students’ lives.

Amanda Ronan is an Austin-based writer. After many years as a teacher, Amanda transitioned out of the classroom and into educational publishing. She wrote and edited English, language arts, reading, and social studies content for grades K-12. Since becoming a full-time writer, Amanda has worked with a diverse set of clients, ranging from functional medicine doctors to design schools to moving companies. She blogs, writes long-form articles, and pens YA and children's fiction. Her first YA series, My Brother is a Robot, is slated for release by Scobre Educational Press in September 2015.