Teaching the Next Generation Financial Literacy

Dawnyela Meredith | 10/15/2012, 1:53 p.m.

In today's economy, nearly everyone wishes that his or her personal finances were a little bit stronger. It was recently revealed that household net worth has been set back 20 years, according to the Federal Reserve's Survey of Consumer Finance. Financial literacy has never been a more important skill and will be even more critical for the next generation.

Unfortunately, many children are not getting the financial literacy education they will need as adults. The Jump$tart Coalition for Personal Financial Literacy's most recent national survey, which measures the financial literacy in high schools, found that seniors answered just 48.3 percent of the financial literacy questions correctly.

Compared to other countries, things do not look any better. Currently, American students rank behind their peers in Mexico, Australia and Brazil in their knowledge of financial literacy and basic concepts like interest rates and budgeting money, according to Visa International Financial Literacy Barometer 2012.

I partner with a public charter school in Washington D.C that teaches financial literacy. The school has taught financial literacy for the past five years, partnering with the Alliance of Securities and Financial Educators--on whose board sits members of the Securities and Exchange Commission. ASAFE volunteers use a program called the Junior Achievement curriculum and model which is a good fit for the school's educational program which is based on Expeditionary Learning, which emphasizes learning by solving problems as a superior approach to rote learning.

Educators at our school believe that adults not talking to children about money cause financial illiteracy. Unfortunately, in too many families, talking about money is still seen as a taboo topic--or something that young people do not need to know about.

Through our six-week financial literacy program, we want to break through that barrier. The program begins with students learning the basics of budgeting, and the impact of interest rates on savings and purchasing things on credit. Along the way, students are tested by activities and competitions to reinforce what they have learned.

After students learn the basics, they next tackle more complex financial situations. As the program ends, students learn how to pull together resources to set up and operate a student-run store. In the past, this has enabled students to get real experience making decisions about whether it is the right time to expand, and learn the true costs of buying something on credit.

Our goal is to have students leave the program with an understanding of the power and risks of money. We aim to create a foundation from which they can learn to become savers, and grasp the risks and the benefits of credit.

In addition to learning an important new subject, financial literacy reinforces the lessons students absorb in math class, including the real world value of concepts like fractions and percentages. Because Two Rivers believes in making character education a key part of learning, financial literacy classes are used to highlight the importance of hard work and making responsible choices.

Our commitment to teaching financial literacy is one reason why Two Rivers' students perform strongly on the city's standardized math tests. In the District's 2012 standardized tests, Two Rivers came first in math and second in reading among all D.C. charter elementary campuses. Overall, our elementary school scored 21 percentage points higher than the average D.C. charter school and 29 percentage points higher than the average D.C. traditional public school. Our middle school scored 25 points higher than the average city-run school and 17 points higher than the average charter.

Two Rivers also was recently recognized as one of only 22 'high performing' public charter schools by the city's Public Charter School Board, because of its strong test results.

One of the reasons we are able to make a commitment to teaching financial literacy is that, as a public charter school, Two Rivers has greater freedom to set curriculum and school culture than its counterparts in D.C.'s traditional public school system.

Faced with budgetary problems, too many school districts are cutting back on teaching financial literacy. The financial collapse of 2008, when many adults counted the cost of their own financial illiteracy, shows us why that decision is a mistake. If we want to prepare today's students for the challenges and opportunities they will face tomorrow, we as adults need to provide the financial literacy education they will need.

Dawnyela Meredith is the Director of Out of School Time Programs for Two Rivers Public Charter School