Prepare Students for Life by Teaching Personal Finance
Suiter, Mary C, St Louis Post-Dispatch (MO)
The St. Louis Fed applauds the St. Louis Regional Chamber's "Top Ten by 2025" campaign to have the region ranked among the nation's top-10 best-educated metro areas.
Post-secondary education is crucial in advancing the economic well-being of individuals and the St. Louis region. We also need to equip our youth with the personal finance skills needed to succeed individually and, in turn, contribute to the health of the local economy when they graduate with their degrees.
According to a 2009 study by the Financial Industry Regulatory Authority Investor Education Foundation, 19 percent of the people surveyed in both Missouri and Illinois reported spending more than their income in the previous year. In Missouri, 66 percent reported lacking a rainy day fund sufficient to cover three months of expenses in case of emergencies. In Illinois, 62 percent reported lacking such a fund.
In another study, Capital One found that 38 percent of high school seniors reported being either unprepared to manage their money, or unsure of their ability to do so. The study also found that 87 percent of them said that their parents were their primary resource for information about personal finance, but only 22 percent talked to their parents about money "frequently." Forty-four percent of those planning to borrow money for college had discussed it with their parents only briefly, or not at all.
So, as a community, what can we do?
Both Missouri and Illinois have personal finance or consumer economics requirements for high school. However, neither state requires testing in those areas.
But, research suggests that high school may be too late to start. The elementary school years may be the prime opportunity to influence financial behavior later in life. A study published in the Journal of Consumer Affairs showed that children during those years begin to form the knowledge, skills and behaviors that lead to financial capability later in life. …