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WHAT WORKS IN EDUCATION The George Lucas Educational Foundation
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What Is Financial Literacy?

Dr. Lennette A. Coleman

Principal, Ariel Community Academy
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A green and red piggy bank are standing on both ends of a seesaw.

What is financial literacy? There are many definitions floating about, and most are based upon a knowledge and understanding of personal finance and financial institutions.

Beyond Personal Finance

The public is faced with nearly two decades of struggling global economies, unemployment, and the collapse of numerous financial institutions. Very few families have not experienced the fear of uncertain personal finances and felt concern about being financially stable and secure in their future. Yet, within the same time frame, changes in legislation for investment, saving, retirement, and capital lending have provided the opportunity for individuals to acquire wealth through entrepreneurship and investing.

Therefore, our definition of financial literacy encompasses more than just personal finance. To be financially literate, an individual does need to be fluent in personal finance, but also in global economics, entrepreneurship, and investing -- all on a platform of real-time technology.

Personal finance has moved beyond merely balancing your checkbook and saving for a rainy day. Most banking and financial transactions happen online and in real time, and they can involve and intersect with several institutions and individuals in a matter of seconds. The need to access and utilize money can be immediate. It also requires an understanding of how to navigate personal finance technologically at an early age, which is a necessity today.

Global economics impact everyone. Long before the era of industrialization, trade and commerce between countries and continents were interconnected and interdependent. Currently, struggling economies have brought more individuals who seek entrepreneurial endeavors. Entrepreneurship is more than having an idea for a product to manufacture. Ideas, services, and even commentary and critique now have a market -- and a market value. Entrepreneurship is about seizing an opportunity to advance ourselves and our ideas, and to benefit financially from the interests and needs of others.

Investing is the jewel in the crown. It is simply not enough for an individual to work hard and earn money. You need to make the money that you earn work hard for you! Investing is the greatest source of accumulating and maintaining wealth. There are a myriad of ways to invest, allowing even the hard-working individual to grow his or her finances and secure a comfortable future.

Teaching Financial Literacy: An Open Invitation

In terms of public education, financial literacy is unexplored territory. School districts acknowledge that it is necessary for students to be financially literate in order to be college and career ready. However, it is difficult for schools and districts to consider how they will achieve that goal. What content should be included? What specific skills should students be equipped with? How can the curriculum and instruction engage students in real and meaningful ways? How can students understand the ways in which financial literacy applies to their immediate worlds? The stakeholders in this conversation are public partners, financial institutions, and government entities. Missing from the conversation are teachers.

Every school administrator knows that teacher buy-in is critical. Even the best data-driven, research-based curricula, without teacher ownership, becomes just a set of expensive worksheets. Teachers need to know and understand what it takes to become financially literate and why it is so necessary. They must be at the forefront of defining what financial literacy is and what it is not.

I am inviting teachers of economics, business, social sciences, math -- and in fact, all subjects at all levels -- to join in this conversation. In the comments section below, share your ideas on this unexplained territory. Share your experiences, and please provide the defining components to a new body of knowledge that will lead our students into the next millennium.

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Caroline's picture

Thinking about youth becoming adults without any financial literacy education is a scary thought. Teaching students how to make and save money is crucial to their success in life; but getting teachers to buy into integrating this into their curriculum can be challenging with all of the standards that need to be covered each year. A financial literacy curriculum that is aligned to math and reading standards would help make these programs more successful and more wide-spread.

bgibson's picture

Financial literarcy is a tool that are young people need in their arsenal to be successful and competitive members of society. While the basic premise of S=I (savings = investment) still holds true, the complex nature of finance requires more than a cursory glance. More importantly, that knowledge will provide our youth with a macro view of the econmony. What is globalization? How do Japan and China fit in the equation? Is America the superpower that it once was? It seems that a rigorous math and social sciences curriculum should fit the bill.

RdBarker's picture

Investing our money and having it grow for us is such an important aspect of financial literacy! Giving students the knowledge and thus the tools to engage in successful investment growth opportunities allows them to attain and maintain wealth.

Joan Kane's picture
Joan Kane
Business Teacher at South Shore International College Prep HS, Chicago, IL

Knowing how to plan a diversified portfolio is an essential skill for my students. I feel a sense of urgency for them because their generation will not have the same access to pension plans and the role of Social Security for them is unknown. The responsibility of planning for retirement will fall squarely on their shoulders as they move through their careers. That's why it is critical that they understand the power of compound interest and the mechanics of wealth creation. Right now, they have a powerful tool with great benefit - time!

After all, I've never met anyone who thought he/she started saving too early!

Steve Mease's picture

Check out how your state fared!
Champlain College's Center for Financial Literacy released its 2015 report card on each of the 50 U.S. states and the District of Columbia on how well their high schools teach personal finance. States received grades ranging from A to F.

The 2015 National Report Card on State Efforts to Improve Financial Literacy in High Schools follows the original 2013 report card, which generated widespread media attention, but more important, discussion among state legislatures and organizations committed to improving financial literacy in America.

John Pelletier, director of the Champlain center, notes that the 2015 report card is even more rigorous in its approach, and it shows that some states acted on the 2013 report and improved their educational efforts. See the full report at
http://www.champlain.edu/about-champlain/newsroom/cfl-report-card-2015

Geraldine Waldron's picture

I work in australian education and have firmly held long the belief that it is essential, now more than ever, that students need to be taught 'financial literacy' as part of their curriculum/school studies. Particularly here, with superannuation as an important aspect. There is a growing need for this investment in student learning & development, to improve understanding: it would lead/serve also as an important part of mental health & growth. I would dearly love to be part of a group to help lead with this initiative.

Dr. Lennette A. Coleman's picture
Dr. Lennette A. Coleman
Principal, Ariel Community Academy

Thank you for sharing, this is great report.
I am pleased that Illinois scored a "B", but concerned that only 9 weeks of personal finance constitutes a score of "B" in financial literacy!
Champlain conducted some great research and included input from some impressive organizations which I am very familiar with; Presidents council on Financial Capability, Council for Economic Education, Jump Start.
But I still feel teachers voices are lacking in the conversation nationally.
I feel districts need to realize the importance of having students be financially literate as so succinctly presented in your report, and get on board and make it happen.
I have often in discussions with colleagues stated that school districts will not fully embrace financial literacy until there is a hue and cry form Academia that identifies financial literacy as a characteristic of college and career readiness and a requirement for post secondary admission.
So kudos to Champlain for leading this effort and let's all push public education to not be the last guest at the party!

Jen Davidson's picture
Jen Davidson
Lifelong Learner

I'd like to share with everyone in the San Francisco Bay Area the opportunity to gain some financial literacy for FREE! Multiple workshops and resources available. Make an appointment to guarantee service or just walk-in!

San Francisco Financial Planning Day
THIS SATURDAY Nov 7, 2015
9am - 4pm
San Francisco Public Library
100 Larkin St, San Francisco, CA 94102
RSVP: www.financialplanningdays.org/sanfrancisco
877-861-7826 for questions

If you miss this one or live in the East Bay, there are additional activities and locations available, so please visit the website www.financialplanningdays.org

Mikerini_MRE's picture

In Indonesia, some banks had engaged in financial education for high school students through CSR activities. Unfortunately, the event eventually just become a means of promotion of bank products and services. To teach financial literacy to students should not just stuffing them with various kinds of information about financial products and services, but the material must be completely in context with the financial issues they face everyday.

Jaime Campbell's picture

In order for financial literacy to become an official part of the curriculum at multiple grade levels, the nation's educational leaders must finally and fully transition the country out of a system designed to train the population for success as Industrial Revolution grunts. Computers or no computers, it still takes that shape.

This includes a fundamental shift away from an economy which requires consumerism at the expense of financial health, personal happiness, and environmental sustainability.

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