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Nearly 14,000 Pinellas County and area eighth-graders a year spend six weeks in school learning the basics of personal money management. Then they travel to Finance Park in Largo to prove in a daylong role as "adults" that they know how to budget and spend money responsibly. Close to 90 percent pass the test.
That's an impressive number and a salute to the area's commitment to teaching some key economic life skills.
"I have many parents ask where this program was when they were in school," says Finance Park teacher Janet Lynn. Her eighth-grade program and a fifth-grade introduction to economics called Enterprise Village are housed at the Gus A. Stavros Institute on Starkey Road.
If only the nation as a whole paid as much attention to the financial literacy of the next generation. When it comes to managing dough, there's too much duh.
Results of the latest nationwide survey on the financial know-how of high school seniors show - yet again - a truly poor understanding of personal money management, budgeting, debt and savings. More than 4,000 12th-graders in 33 states were asked 31 multiple-choice questions about personal finance and economics.
On average, the students answered only 52.3 percent of the questions correctly.
That was barely better than the 50.2 percent in the previous survey in 2002 and 51.9 percent in 2000. But students did not match 1997 aptitude levels, when 57.3 percent answered their questions correctly.
No matter the year, most of our high schoolers continue to flunk every survey.
The financial know-how of high school seniors is "dismal but improving," Lewis Mandell, a professor of finance and managerial economics at the University of Buffalo School of Management, said in a statement. Mandell conducted and analyzed the results of the fourth survey since 1997 on behalf of the Jump$tart Coalition for Personal Financial Literacy.
Talk about deja vu. I wrote a column two years ago this month about the 2002 survey's equally sorry results. The column headline? Give teenagers, and their parents, an F in economics.
In 2004, with financial illiteracy of kids-about-to-become-adults still so prevalent, there's new cause to worry:
First, despite some fine efforts here and elsewhere, the country is making little headway to educate young people in basic personal finance.
Second, high school grads are under increasing financial pressures today. College expenses are skyrocketing, forcing many families and students to take on hefty education debts. And high school grads looking for jobs will find fewer opportunities for decent-wage work as companies shift more lower-level tasks overseas or, as part of a major productivity push, squeeze more work out of their current employees.
Third, young adults must confront the lure of increasingly abundant credit card solicitations. College freshmen already average about $1,500 in outstanding credit card debt. The sum doubles by the time they are college seniors. That's a lot of high-interest debt for college students with little or no income of their own.
Talk about throwing young adults to the financial lions.
The new survey shows fewer than one in five 12th-graders correctly answered a question about how much an individual is liable for after he or she reports a stolen credit card to the issuer. More than half of the high schoolers answered "none." The right answer is $50.
Asked about the interest received on a savings account at a bank, more than half said such earnings may not be taxed. Wrong. Earnings will be taxed, as the right answer notes, if your income is high enough.
Here's one question and response that caught my eye. If you have money to invest for the long term, as much as 18 years, what investment tends to offer the greatest potential for growth? The correct answer - stocks - was picked by only 17.2 percent of the 12th-graders. That was down from 18.7 percent who knew the right answer in the 2002 survey.
Nearly half in the 2004 survey incorrectly chose "U.S. government savings bond" for an answer.
Maybe these stock-wary high schoolers were influenced by the sharp decline in the stock market a few years ago. Maybe they heard their parents gripe that they will have to work longer before retiring to make up for the market losses to their nest eggs.
On the brighter side, nearly 79 percent in the survey correctly said the primary sources of income for most people age 20 to 35 are salaries, wages and tips. That's up from the 71.4 percent who answered correctly in the 2002 survey.
At Largo's Finance Park, teacher Lynn is a big believer in a curriculum that exposes Pinellas County's fifth-graders to basic business ideas like profits and losses, then introduces eighth-graders to the reality and constraints of personal budgets.
Ask an unprepared eighth-grader what amount of money seems like plenty to live on. Lynn says she often hears a sum near $24,000 a year. After all, that's $2,000 a month, a princely sum!
Then Lynn reminds the middle schooler of taxes, the price of housing, and the costs of electricity and water and food, cars and insurance, clothing and entertainment. And don't forget to save a bit on the side.
The financial exercise quickly becomes a sobering wake-up call for a young teenager.
The good news is, the same organization that runs Enterprise Village and Finance Park is about to roll out a new financial education program aimed at high schoolers. Called Career Cove, the program focuses on career planning, decisions in the workplace, and ethics.
The 2004 financial survey for 12th-graders is no pushover. This year, 65.5 percent of students failed the exam and 6.1 percent scored a C or better.
Of course, many adults would find themselves challenged to ace some of these same questions. Here's hoping the young will soon be able to teach their elders an economic lesson or two.
- Robert Trigaux can be reached at trigaux@sptimes.com or 727893-8405.
HOW'S YOUR FINANCIAL LITERACY?Here are three of the tougher questions recently posed to 4,074 12th-graders in 215 schools across the United States. You'll find the answers on Page 6D. Take the full survey online at www.sptimes.com Click on "Links from the paper" in the lefthand column.
1. Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?
a) older, working couples saving for retirement
b) older people living on fixed retirement income
c) young couples with no children who both work
d) young working couples with children
2. Many savings programs are protected by the federal government against loss. Which of the following is not?a) a certificate of deposit at the bank
b) a U.S. Treasury Bond
c) a bond issued by one of the 50 states
d) a U.S. Savings Bond
3. If your credit card is stolen and the thief runs up a total of $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to federal law?a) none
b) $50
c) $1000
d) $500
ANSWERSAnswers to the financial literacy question on page 1D and the percentage of 12th-graders choosing the correct answer:
1. b) 46 percent.
2. c) 35.3 percent.
3. b) 18.1 percent.
Source: Jump$tart Coalition for Personal Financial Literacy.