Financial literacy 101

Robin Wise believes knowledge is power when it comes to money matters, and that’s why she’s determined to help the next generation become more financially literate.

“Not understanding the rules of personal finance is what keeps people poor,” says Wise, president and CEO of Junior Achievement-Rocky Mountain Inc., a nonprofit that provides in-school and after-school programs focusing on entrepreneurship, financial literacy and work readiness.

Wise’s organization has more company than ever in its quest to improve financial literacy. Educators and industries across Colorado have joined in, a reflection of a new economic reality that has made career changes commonplace and shifted retirement funding responsibilities from employer to individual.

“You used to get a pension,” says J. Robert Brown, a professor at the University of Denver’s Sturm College of Law. “That doesn’t happen anymore. Today you have to start planning for retirement in your twenties. But for that to happen, you’d have to know what to do.”

The Great Recession that began around 2008 exposed a widespread lack of awareness of the risks associated with investing and personal finance. “The whole notion of a 401(k) being a guaranteed stable form of retirement savings is vulnerable,” says Mark Goldman, director of corporate communications for TCF Bank. “We are in a 21st century banking environment, and the way we manage money today is different than it was just 15 years ago.”

LESSON LEARNED

The recognition of these vulnerabilities has paved the way for increased educational efforts. But certain lessons – such as the merits of delayed gratification and planning ahead – can be challenging to teach and even harder to measure, Wise says. Her organization sends volunteers into neighborhood schools armed with sequential curriculum and charged with the task of weaving personal anecdotes into lessons.

In accordance with a state law passed in 2008, the Colorado Department of Education has added a financial literary component to the Colorado Student Assessment Program, the standardized test administered annually to public school students. This spring will be the first time this subject area is assessed in grades four, seven and 12, under the broader topic of social studies.

“In the last few years there have been mandates in public schools to require financial literacy, but there hasn’t been funding to support these mandates,” Goldman says. “TCF fills that void by bringing teachers peer-reviewed curriculum. The bank offers two programs: the Financial Scholar’s Program, geared toward high school students, and an accompanying online Adult Financial Literacy Program. The regional bank aims to educate 2 million people over the next three years through these offerings.

For high school curriculum, TCF partnered with EverFi, a leading education-technology company, to create teacher-led lesson plans for 340 high schools in six states within TCF’s eight-state region. In Colorado, TCF activated the program in five public schools as of Nov. 5 last year, with plans to expand to 13 schools in the near future.

EverFi trains teachers to use the curriculum, a 10-part series consisting of six to eight hours of classroom instruction. The set of courses – available at tcflearning.com – “gamifies” the topic of financial literacy, covering 600 topics.

“The old way of teaching this was with traditional classroom instruction and worksheets,” Goldman says. “Now, students are engaged in cloud modules that allow them to learn and adapt at their pace.” For studying the basics of a mortgage, for instance, students visit a virtual bank where they gain proficiency through pop-up games.

STREET SMARTS

While promoting personal finance education is one way for businesses and other organizations to give back in the wake of the financial meltdown, Goldman says banks like his have something to gain from increased awareness. “Financially literate customers are better for communities, better for banks,” he says. Studies show that low levels of financial literacy are associated with long periods of economic insecurity.

“This is about creating smart consumers with whom we can build long-lasting financial relationships,” Goldman says.

TCF added an adult program upon finding that 90 percent of youth surveyed felt “relatively clueless” about financial literacy and “weren’t getting enough information from parents,” according to Goldman. TCF launched free adult curriculum in October 2013. Non-students can participate in similar virtual learning, though Goldman says that moving forward, adult programs will only be available to TCF customers.

MONEY MANAGEMENT

The Young Americans Center (YAC), a for-profit entity founded by cable television pioneer Bill Daniels with a complementary nonprofit arm, is seeking to promote and facilitate parent-child financial discussion, too. “Research shows that a large percentage of people of all ages, incomes and education lack the basic financial knowledge and skills to ensure long-term stability for themselves and their families,” says Sara Sankovich, coordinator for the center’s Money Matters program.

Money Matters was made possible by a donation from Great-West Financial Group. At the heart of the program is the belief that it’s never too early to teach children about money management.

“We’ll work with any age group, but our primary focus is on K-8,” Sankovich says. With younger kids, that means a lot of storytelling and games. “We try to limit the amount of technology we rely on in schools because we go to a wide variety of locations and don’t know what is going to be available,” Sankovich explains.

Complex concepts like compound interest are simplified and gamified with puppies and apple trees. “We have a little puppy farmer with one apple tree,” says Sankovich, of a lesson. “He gets some apples from that tree, then plants the seeds. Next year, he has three trees – the apples grew because he took apples he already had and planted them.”

Money Matters visits roughly 40 classrooms per month, sharing lessons and providing resources for teachers. There’s also a free Saturday class for kids at the organization’s Cherry Creek headquarters, (3550 First Ave.) and a free parent-child family night. Content is available on YAC’s YouTube channel for parents who can’t make it to class. 

The organization boasts more established programs like Young Ameritowne and International Towne, authentic field trip programs that let kids apply for imaginary checking accounts, apply for and get jobs, and then manage a fictional town for a day. YAC is also home to Young Americans Bank, a for-profit venture and the only FDIC-insured bank in the world designed specifically for young people. The bank offers products such as savings and checking accounts. The catch: Customers must be 21 years or younger.

“We have infants with savings accounts, Sankovich says. “As they grow, they come in and make their own deposits, learning how to function in a bank.”

Young savers learn lessons in delayed gratification and the importance of saving. As they grow older, they are encouraged to participate in a training process to apply for debit cards.

YAC and Junior Achievement Colorado have joined the Colorado Jumpstart Coalition, made up of 35 individuals and organizations passionate about personal financial literacy. Last year, Colorado’s coalition won State Coalition of the Year, an award given by the national parent organization to one coalition annually.

This month, the coalition hosts its annual free Fiscal Fitness Workshop at Front Range Community College, Jan. 25-26, with an opening “Evening with the Fed” reception on Jan. 24, starting at 5:30 p.m. For local teachers, administrators and content specialists, the workshop helps with personal finance aptitude. Space is limited and advance registration required.

RESOURCES

Junior Achievement Colorado
jacolorado.org

University of Denver Sturm College of Law
law.du.edu

TCF Bank
tcfbank.com

Colorado Department of Education
cde.state.co.us

Ever-Fi
everfi.com

Young Americans Center
yacenter.org

Money Matters
Class Info.:
yacenter.org/classes/

Colorado Jumpstart Coalition
jumpstart.org