Economic turmoil shows need for financial education programs

What caused the current economic crisis? Some blame the investment banks and predatory lending practices. Others may blame government inaction. But the millions of uneducated consumers who took what was offered them without an eye to the future, and borrowed more than they could afford, must accept their share of the responsibility.

One of the causes was a lack of financial education on the part of consumers. Regardless of how we got here, the lack of financial literacy, especially for today's youth, is a serious concern.

When did you first learn what compound interest was? Did you understand mortgage rates and the different types of loans that were available before you bought your first house? Or are these concepts still a little cloudy for you to comprehend even now? Unfortunately, research indicates that a surprising 42 percent of parents have not taken any steps whatsoever to discuss financial basics with their children. 

Many parents assume that their children learn money management skills as part of their school’s curriculum, when in fact, fewer than half of U.S. states require even a basic economics course, much less personal financial literacy education.

Such lessons are an important step in helping young people effectively manage their money so they can avoid the financial traps into which so many adults have sadly fallen. It’s hard for any of us – whether adults or kids – to sort through and make sense of the reports on lagging home sales, a plunging stock market, and government bail-out plans. And while the complexity of recent events may be difficult for our children to grasp, the fact remains that parents must seize the opportunity to talk to their children about financial literacy.

In North Carolina, financial literacy education is now a requirement for high school students, but funding is generally not provided. This means that it is even more critical for schools to work with organizations that can provide relevant financial literacy education for students.

One such organization -- Junior Achievement (JA) -- is currently embracing this challenge in the Wilmington area with the conviction that our programs are needed now more than ever. JA is an international organization whose mission is to work with the business and education communities to provide in-school programs which teach K-12 students lessons about how to be financially literate. Age appropriate and experiential activities are designed to allow students to see the impact of their decisions in a safe and nurturing environment, providing them with the knowledge, skills and confidence to apply what they have learned in the real world.

Junior Achievement teaches students practical skills that position them for success, such as how to create and use a personal budget, how to calculate the cost of credit, and the importance of saving and investing for the future. JA programs are delivered by business and professional volunteers from the Wilmington community including Corning, GE, PPD, and others from key industry groups such as banking, real estate, insurance, accounting, legal and manufacturing. These volunteers, often classroom parents, serve as role models for the students and bring real-world expertise to the classroom.  Results indicate that JA programs also help students become workforce-ready by teaching leadership, critical-thinking, and problem-solving skills.

An additional benefit is that the volunteers, through their firsthand exposure to the classroom, develop a better appreciation for the challenges faced by our school system and become community advocates for educational improvements.

During the current school year, Wilmington’s JA volunteers will present programs in 19 different New Hanover County Schools. These classes will reach nearly 5,000 local students in 229 classrooms. Since our ability to continue providing these programs depends entirely on contributions, we encourage the business community to support organizations such as Junior Achievement, which need teaching volunteers and financial resources. To learn more about JA in this area, please visit the website www.jacarolinas.org/capefear.html

April is Financial Literacy Month; there is no better time to talk to our kids about the importance of effectively managing their money. Sound financial education and a solid grounding in fiscal responsibility are basic self-defense for all citizens, especially young people. An investment now in teaching our youth how to earn, save and budget, manage credit and control their personal finances rather than vice versa—will pay big dividends in the long term.

John Lyon has a 35 year career with the “Bell System.” His current position as Regional Director of External Affairs for southeastern North Carolina has him involved in being the face and voice of AT&T in meeting with government, business and civic leaders in 37 counties in southern and eastern North Carolina. He currently serves as Chairman of the Board for Junior Achievement of the Cape Fear Region. He also is on the Board of Directors for the Cape Fear Boy Scouts of America, the Burgaw Area Chamber of Commerce, the UNCW Cameron School of Business, and the Wilmington Industrial Development Committee of 100.