I ran this op-ed today from a recent UGA graduate on the Monday education page as I thought it was a good topic.
Katie McCabe recently graduated from the University of Georgia with degrees in international affairs and economics. She is originally from Sylvania, but now lives in Atlanta. She is the founder and CEO of Your Score Matters, a nonprofit dedicated to spreading awareness about financial literacy among young people.
Read her blog and follow her Twitter account at Urscorematters@twitter.com. If you know of a group in the Atlanta area that would benefit from free seminar on a basic financial topic, please contact her at email@example.com
By Katie McCabe
Having attended the University of Georgia, I feel like I acquired some smart friends — pre-med, business, mathematics, philosophy. I knew kids who were taking some of the hardest classes offered at UGA.
And many of these students came from some of the best high schools and most well-to-do areas of the state, all very well-prepared for both college and life in general.
So you might imagine my surprise when these same intelligent, driven peers would call me up and ask, “Can you help me with my credit score?”
This question didn’t, however, surprise me. After years of independent interest in and study of personal financial literacy, I’m surprised when a person my age, 23, actually knows their credit score. I’m even surprised when people know what financial literacy means.
If the smartest kids at the state’s flagship institution don’t know, what does that say about the rest of Georgia’s youth?
The numbers reflecting financial literacy for America’s youth are alarming. The Jumpstart Coalition, a nonprofit dedicated to increasing youth personal finance education, issues a biannual survey aimed at measuring financial knowledge.
In 2008, 6,856 high school seniors nationwide took the survey, scoring a mean of only 47.5 percent correct. Other studies and surveys (although very few) reflect similar percentages. And these are basic questions about things like taxable income, basic interest, and financial terminology.
This lack of knowledge manifests itself in every aspect of personal financial behavior, not the least of which is credit management. A 2009 working paper for the National Bureau of Economic Research studied the effects of financial knowledge (or a lack thereof) on personal wealth, and found that people who know less about the financial system tend to accumulate more negative debt.
This same study also found that those who are less knowledgeable tend to pay only the minimum payment for any credit, which causes them to pay about 50 percent more in fees than the average credit card holder. So why is it that youth are so ill-informed when it comes to personal finances? The short answer is because financial literacy is not adequately taught in Georgia’s schools.
Georgia does cover personal finance topics on its high school graduation test, but these topics are only taught within economics curricula, which are lumped into broader social studies courses.
The result of this educational sausage-making process is a sort of identity crisis for personal finance as a subject. This can cause a range of problems, such as a lack of adequate teacher training in financial topics.
Furthermore, Georgia only provides teachers with generic “performance standards” instead of a standardized, comprehensive curriculum. Without a standard, it’s very difficult to evaluate the curriculum’s effectiveness, another obstacle that Georgia shares with the rest of the nation.
It’s unfair to hold youth accountable for skills that they may never have learned in the first place. More unfair is that those who may have the least end up paying more in fees and interest simply because they were never taught the rules of the financial system.
After seeing firsthand the effect that a lack of financial knowledge can have on young people struggling to support themselves, I started “Your Score Matters,” a nonprofit that teaches financial skills to youth and uneducated adults. “Your Score Matters” offers free Atlanta-area seminars on basic financial topics such as credit cards and money management.
subsidiary goal of this organization is to raise awareness about the state of financial knowledge among youth, especially in Georgia.
The statistics outline a path for a legislature that wants to prepare its youth for their financial futures: Start teaching kids about personal finance as early as possible; create a standardized, subject-specific curriculum mandate; and properly train and certify teachers to teach financial material.
With the next legislative session beginning in January, I challenge the General Assembly to address this injustice by putting financial literacy education for Georgia’s public middle and high schools at the forefront of its educational agenda.
The ultimate goal would be to enact a statewide mandate creating a stand-alone course on financial literacy. But perhaps creating a committee to spearhead research in the area of financial education may be a more plausible (and cheaper) place to start. At this point, any legislative action aimed at spreading awareness for financial literacy would be a huge step in the right direction.
By Maureen Downey, for the AJC Get Schooled blog