Money 101

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When the National Council on Economic Education gave an economics quiz to 2,242 high schoolers early this year, 60 percent of them failed. Just 9 percent scored As and Bs.

Only 28 percent, for instance, knew that their savings were most likely to lose value because of inflation if they kept their cash in a mattress or a piggy bank. (See “Report Roundup,” June.)

That was the latest of several studies in recent years that have spotlighted the lack of financial literacy among American teens – a problem that puts many of them in financial trouble as they move toward adulthood, especially as they rack up credit card debt and try to manage checking accounts.

A survey of 4,000 youths in 2004, conducted by the Jump$tart Coalition, found that 31.8 percent of high school seniors used a credit card – but seniors who didn’t use credit cards scored higher on the survey questions about credit.

In 2001, the U.S. General Accounting Office estimated that about 70 percent of college undergraduates had at least one credit card, with an average monthly balance slightly above $2,000.

When it comes to money, youth give priority to immediate gratification, says Brent Neiser, director of collaborative programs for the National Endowment for Financial Education. “To have what they want now, they borrow into the future.”

While some youth struggle with credit card management, others enter adulthood knowing little about how to manage bank accounts, invest wisely and responsibly, or create and follow a personal budget.

Perhaps the biggest culprit is lack of guidance from adults. A 2001 survey by the National Foundation for Credit Counseling (NFCC) found that only 32 percent of parents and guardians talk to their children regularly about personal finances. As part of the Council on Economic Education’s 2005 quiz, which was conducted by Harris Interactive, only half the high schoolers said they had ever been taught economics in school.

No wonder that in the NFCC survey, two-thirds of high school seniors said they don’t believe financial issues have a strong impact on their lives.

There are signs of hope. The 2004 Jump$tart survey found that the youths answered 52.3 percent of the questions correctly, up from 50.2 percent in the previous survey, which was conducted in 2002. Nevertheless, 65 percent of the youths failed the exam.

Financial literacy programs for youth take several approaches to increase youths’ understanding of personal finances. One is to give kids practical experience as early as possible, by having them managing their own bank accounts. Another is to conduct classroom-like lessons about such issues as credit card debt. A program by Girls, Inc. puts youths through a series of education sessions, culminating in role-playing, where they act out economic concepts such as bartering and investing. More ambitious efforts teach youth about entrepreneurship.

These strategies are used by the programs profiled on the following pages, each of which aims to help a different group of youth.

Credit Abuse Resistance Education (CARE)
1400 U.S. Courthouse
100 State St.
Rochester, NY 14614
(585) 613-4200,

The Approach: Volunteer lawyers and judges visit high school classrooms in 24 states to teach youths about credit cards and explain how easy it is to get into trouble with credit card debt. “There’s a lot of pushing for financial literacy education, but they’re teaching about balancing the checkbook, the difference between whole life insurance and term life insurance, and mutual funds,” says CARE founder John Ninfo. “No one ever dropped out of college because they didn’t know what an annuity was.”

The program takes just 45 minutes to deliver. Youths hear a presentation, then watch a video called “Things I Learned the Hard Way: Paying for Consumer Credit.” They go home with a booklet, “Creating a Realistic College Budget that You Can Stick To.”

History and Organization: Ninfo, a bankruptcy court judge in Rochester, N.Y., founded CARE three years ago after hearing from too many people that “if they’d just learned basic credit-card management skills in high school, they never would have incurred so many debts.” The program is administered primarily through courts and bar associations around the nation, with professionals (mostly lawyers, judges and accountants) trained to present the program in their localities. Volunteers are trained through materials and articles on the website, which also has links to videos of presentations. Occasionally Ninfo himself leads training sessions.

Schools (or other youth-serving organizations) can go to the CARE website to find presenters in their areas, and to view CARE’s presentation materials.

Youth Served: Ninfo estimates that CARE has reached more than 20,000 youth since its inception.

Staff: CARE has no staff dedicated solely to it. Ninfo runs the program and sometimes presents it to youth. Most of the presentations are made by the more than 100 volunteers. The CARE task force, composed of judges, accountants and teachers, oversees development and adjustment of the program and its curriculum.

Funding: CARE receives no outside funding. Ninfo pays for the website himself, and all program presenters are volunteers. Local courts have covered the negligible programming costs, including photocopying and travel expenses, most of which are related to driving.

Measuring Impact: Ninfo does no formal evaluations. After each session, youths complete an evaluation so that CARE can adjust the presentation. In response to youth feedback, CARE has increased its visual presentations (including the video) to complement the oral presentations.

Young Americans Bank
Young Americans Center for Financial Education
3550 E. First Ave.
Denver, CO 80206
(303) 321-2265,

The Approach: Young Americans Bank (YAB) is the only financial institution exclusively serving youth under 22. Youths learn financial skills by maintaining their own savings and checking accounts, receiving loans and opening credit card accounts. Youths need only $10 to open a savings account and $50 to open a checking account.

The bank is designed like a real bank, except that the ultimate goal is education, not profit. To this end, kids get extensive consultations before being approved for loans or credit cards, and interest rates are far lower than at conventional banks.
Youths can open accounts in person at the Denver headquarters, or online.

History and Organization: Businessman Bill Daniels, who is sometimes called “the father of cable television,” opened the bank in 1987. Debbie Pierce, YAB’s vice president for communications, says Daniels was “scared to death” when he first entered a bank as a young adult and compared the experience to “brain surgery.” The CEO is Barbara Danbom.

Youth Served: Nearly 15,000 accounts exist today, and more than 50,000 have been opened since the program’s inception. The average age of a savings account client is 11; it rises to 16 for checking accounts. About 90 percent of the young clients live in the Denver area, but customers from around the country make transactions by mail or on the website.

Staff: On any given day, eight to 10 people work at the bank’s Denver location. Most are customer service representatives trained to work with youth. More staff work on the weekends and during the summer, when kids have fewer school commitments. There are also youth and adult boards of directors, so that the age groups partner in bank decision-making.

Funding: Daniels subsidized the bank until his death in 2000; he created the Bill Daniels Foundation to continue to keep the bank above water. The fund subsidizes about half the cost, which in 2004 was $2 million. Other funding comes from bank fees, which are lower than at conventional banks.

Measuring Impact: The bank has not kept statistics, citing privacy policies and the difficulty of keeping in touch with those who have aged out of the program.

Economic Literacy
Girls Inc.
120 Wall Street
New York, NY 10005
(800) 374-4475,

The Approach: Economic Literacy is designed “to empower girls to recognize early on that they can exercise control over their financial future,” says Christopher Collins, who manages the program. The program consists of four age-based curricula: “She’s on the Money!” for 6- to 8-year-olds; “Dollars, Sense, and Me,” for nine- to 11-year olds; “Equal Earners, Savvy Spenders,” for 12- to 14-year-olds; and “Futures and Options,” for older teens.

Over the course of 10 sessions delivered through Girls Inc. programs, youths learn about concepts such as investing, budgeting and taking informed financial risks, as well as gender-specific issues, such as equal pay for equal work.
Independence and stability are the issues most applicable to females, Collins says. Among the questions posed: “Can you live comfortably on your income? Can you provide for your family, if you have one? Are working conditions safe? Is your career fulfilling?”

History and Organization: The program was launched in 2003. Research conducted for Girls Inc. in 1998 showed that although boys and girls had relatively equal knowledge about financial subjects, girls were only half as likely to assert that they were “very knowledgeable” about money and finances.

Youth Served: Though Girls Inc. does not keep statistics on participants in specific programs, it says that 840,000 youth participate in Girls, Inc. programming each year. Most Girls Inc. participants have annual family incomes of under $25,000. Forty percent of those served by Girls Inc. are ages 12 to 18; of those, nearly 75 percent are youth of color.

Seventy of the Girls Inc., affiliates offer core components of the economic literacy program. Youth workers at 27 “licensees,” such as YWCAs, have been trained to teach the curricula.

Staff: Girls Inc. has 55 employees in its offices in New York, Washington and Indianapolis. There are 73 member organizations nationwide, each with paid employees and some volunteers.

Funding: Major sponsors include the American Express, Picower, Fannie Mae, TransAmerica and William T. Grant foundations. At the affiliate in Santa Fe, N.M., 135 fourth- through sixth-grade girls participated in a 10-session program at a total cost of about $12,000, according to Executive Director Anne Stewart.

Measuring Impact: There have been no formal evaluations. Girls demonstrate what they’ve learned by participating in a “carnival,” in which they act out scenarios that involve such economic concepts as bartering, the stock market and budgeting.

Enterprise In Action
Junior Achievement Worldwide
One Education Way
Colorado Springs, CO 80906
(719) 540-8000,

The Approach: While many financial literacy programs focus on the basics of personal money management, Junior Achievement (JA) targets financially ambitious youth. Its middle school program, Enterprise in Action, uses hands-on experiences in classrooms to help kids “understand the economics of life,” says Brad Kaufmann, vice president for marketing. The program focuses on the economic knowledge and fiscal discipline needed to become an entrepreneur.

Activities in the 10-session program include understanding supply and demand, product pricing, and how a business moves from sole to corporate ownership. The penultimate activity is about responsibility and the ways that maintaining ethical behavior outside the office influences responsible decision-making within the business.

In the final activity, youths create a model of a fully functioning economy, with each of them playing an entrepreneur within the system. The lesson teaches participants how to allocate money, goods and labor, as well as how “one person’s expense becomes another business’s income,” Kaufmann says.

History and Organization: Junior Achievement has been developing financial curricula for youth since its founding in 1919. It developed Enterprise in Action in 1995.

Youth Served: Junior Achievement reports serving some 4 million American youth in 2004, mostly through classroom presentations and activities. Enterprise in Action is carried out in 7,000 classrooms, reaching more than 80,000 youth in the United States and nearly 200,000 worldwide each year.

Staff: JA works as a franchise system through 145 local offices, which do much of the fund raising, volunteer recruitment and maintenance of school relationships. At each of those sites, staff members teach the Enterprise in Action curriculum to volunteers, who deliver it in classrooms.

Funding: The Allstate Foundation funded the development of the curriculum. Kaufmann says the typical JA curriculum costs $1 million to $2 million. Local affiliates pay national JA $79.20 for the curriculum kit.

Measuring Impact: An evaluation conducted by the Worldwide Institute for Research and Evaluation showed that Enterprise in Action participants scored 18 percent higher on a test of financial knowledge than did students in the same schools who did not participate.