Guest Column

A Case for Teaching Financial Literacy

by GERALD LAUBER

More than 50 years ago, the launching of Sputnik by the Soviet Union jarred our national view of science education and provided the impetus for refocusing our nation’s priorities.

Today, as an epic economic crisis continues to grip our nation, we should use this opportunity to turn our attention to how, when and what we teach our children about sound financial practices.

In June 2009, I had the privilege of testifying before Congress about the need for teaching financial literacy in our schools. What I said in part was this: “Literacy in schools often refers to reading, writing and arithmetic. However, real-life learning, as demonstrated by our current economic crisis, reinforces our belief that the teaching of financial literacy should no longer be an option for the children in our nation’s schools. Our job is to help teachers integrate financial literacy into existing curricula, develop thinking strategies and make learning relevant to the needs of today’s students.”

As a retired superintendent and now an advocate for integrating financial literacy concepts into our nation’s classrooms, I support the view that strong centralized leadership is critical to instructional reform.

A Scary Need
When it comes to learning the basic principles of financial literacy, most of America’s school-age children have been left behind. They are lacking not because of a shortage of information but because little attention has been paid to help teachers incorporate financial literacy concepts and problem-solving tools into a day already brimming with mandated course content.

Survey data points to a need for leadership on the issue. A 2008 study by Lisa Fairfax at the Conglomerate blog indicated any past efforts to teach financial literacy have a grim rate of return. Eleven years ago, when the Jump$tart program began measuring financial literacy, the average financial literacy score for high school students was 57 percent (on a 100-point scale), which is frighteningly low. After a decade to improve the score, the average actually declined to 48 percent.

To be financially literate, an individual needs to know how to decide what to do as well as how to do it. The process of transforming bits of information into coherent and useful knowledge — we call this process “thinking” — is the major focus of effective financial literacy education.

Incorporating Lessons
So just what is thinking? It is the capacity to discern patterns of information and then make them practical. We all use fundamental actions of thinking every day: describing, comparing, grouping ideas, sequencing and relating cause and effect. Most often, this is done in our heads, but when learning and working out problems that are difficult, we benefit greatly from visual tools to formulate, examine and elaborate ideas.

Visual tools explicitly offer financial decision makers, especially young, novice problem solvers, the ability to see how these frames of reference influence what may seem like simple decisions.

This is possible to do within the existing school day. Herb R. Brown, superintendent in Oceanside, N.Y., considered his high school’s economic course, an elective, to be weak on personal finance. So he convened a committee of teachers from elementary, middle and secondary schools to review the literature and identify appropriate lessons on personal finance.

They settled on 20 lessons for elementary school students, infusing them into existing lessons in 5th-grade math and 6th-grade social studies. In middle school, the district replaced a required 10-week course on decision making with a 10-week course on personal finance decisions. In high school, Oceanside introduced a one-quarter course, which the school board now requires for graduation.

The significance of financial literacy also was recognized in Harborfields, a suburban school district of 3,700 students on the north shore of Long Island. The board of education adopted the development of an integrated curriculum for financial literacy as one of its goals for 2009-10.

A Strategic Model
Unfortunately, some financial literacy programs rely on volunteers to visit classrooms to provide students with a yearly dose of information. A reliance on “drive-through” professional development serving snippets they hope will influence future actions does not represent what we’ve come to learn about effective teaching and learning strategies.

If we are going to make the effort to develop a pool of informed consumers, then we must apply the same strategic planning models we use for the teaching of math, science, social studies and other core subject areas to the teaching of financial literacy.

The Teaching Financial Education project (http://teachingfinancialeducation.com), which I oversee, is working to launch a National Center for Teaching Financial Literacy at St. John’s University in New York as a resource for best practices, tools and instructional materials on financial literacy and to provide professional development activities in K-12 education.

Once the blueprint is developed for the integration of financial literacy into other curriculum areas, we hope to expand our efforts to develop regional centers that will help educators teach the skills needed for understanding how money works.

Now is the time for educators nationally to act on implementing high-quality financial literacy programs in our schools. Professional development that is focused and sustained is the only proven vehicle for helping teachers to build a citizen base of informed consumers who will avoid the excesses that led to our current fiscal crisis.

Gerald Lauber, a former superintendent, is senior adviser to The Thinking Foundation’s Teaching Financial Education Group. E-mail: GLauber@TeachingFinancialeducation.com