Life & Financial Coaching

Educating Our Youth

Educating Our Youth

May 13, 2014

The Wall Street Journal recently highlighted an excellent initiative by the Charles Schwab Foundation in relation to personal finance education. Below is the piece:

Carrie Schwab-Pomerantz, 54 years old, didn’t have a lot of money growing up. What she did have was a role model in her father, Charles Schwab, who founded the brokerage firm that bears his name in a two-room office in 1971. “My dad was a struggling businessman until I was in my 20s,” she says.

As a teenager she worked (baby sitting, a paper route, secretary) and she saved—opening a savings account, moving back home after college to scrape together her first and last month’s rent and to buy herself a bed and a dresser.

And she is still working, now to impart the good money habits she learned first hand to those not fortunate enough to have role models like “Chuck.”

It’s no secret that financial illiteracy is rampant in the U.S., where less than one-third of the population can correctly answer three simple questions on interest rates, inflation and diversification, according to a study by Annamaria Lusardi of the George Washington University School of Business. But the jury is still out on what, if anything, to do about it.

Not surprisingly, Ms. Schwab-Pomerantz is a big believer in learning basic money-management skills at a young age. “It really all starts with us as kids,” she says. “That’s where we learn the behaviors, attitudes and habits to take care of ourselves.”

So 10 years ago, shortly after becoming president of the Charles Schwab Foundation, a private, nonprofit organization funded by the Charles Schwab Corp., she refocused the foundation on teen financial literacy, joining with Boys & Girls Clubs of America to educate teens about the basics of personal finance and investing. The result was Money Matters: Make It Count, a personal-finance course designed for club members ages 13 to 18.

To date, more than half a million teens have cycled through the program, which has been adopted by well over half of the 2,700 clubs. It typically runs an hour a week for eight to 10 weeks and covers five subject areas: budgeting, saving and investing, planning for college, credit and debt, and entrepreneurship. “Besides my own kids, it’s one of my biggest sources of pride,” Ms. Schwab-Pomerantz says.

Still, through her work on two presidential advisory councils on financial literacy, she’s well aware that there’s no consensus on what financial literacy means, let alone how to achieve it. So she commissioned a fairly rigorous, yearlong study to evaluate the Money Matters program “to ensure we were making a good investment and were having an impact,” she says.

“There’s still conversation back and forth about whether financial education works,” says Ms. Schwab-Pomerantz.

The results, just in, are encouraging. Teens who participated in the course showed gains in 50 out of 53 subject areas. For example, at the start of the program, just 47% of participants understood the importance of paying yourself first, or automatically saving 10% of what you earn. By the end, 71% understood.

It helps that the teens are by and large eager to learn about money—particularly those from poorer backgrounds.

“The Money Matters curriculum provides them with the knowledge they want but have nowhere else to get,” says Damon Williams, senior vice president and chief educational and youth-development officer for Boys & Girls Clubs. (Only 17 states require high-school students to study personal finance.)

It’s also designed to be fun, with opportunities for teens to work in teams toward relevant goals, such as creating a budget for the prom, or to earn “club bucks” to bank and spend at club stores.

“We don’t want to be school, part 2,” says Mr. Williams. “We want to bring financial principles to life.”

Guest speakers and adult volunteers play a big role, sharing practical experiences and serving as role models, he adds. Mr. Williams is hopeful that in time the program will improve not only teens’ financial knowledge but also their financial behavior. Already there’s anecdotal evidence that participants are more likely to open savings accounts and track spending.

Meanwhile, Ms. Schwab-Pomerantz has devised a kind of remedial Money Matters course for AARP and written a new book, The Charles Schwab Guide to Finances After 50. “The reason baby boomers are ill-prepared for retirement is that no one taught them about saving, budgeting, using debt wisely and living within their means,” she says.

But like the Boys & Girls Clubs teens are taught: You’re never too young—or too old—to learn.