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We're flunking personal finance

By Michelle Singletary
Washington Post Staff Writer
Sunday, May 9, 2010; G01

The financial teaching grade is in for teachers -- and it's not good.

Researchers at the University of Wisconsin at Madison surveyed K-12 educators, and, not surprisingly -- or at least it wasn't a shocker for me -- most instructors don't think they are suitably trained to teach their students the basics of personal finance. The study, "Teachers' Background & Capacity to Teach Personal Finance," was funded by the National Endowment for Financial Education (NEFE).

The teachers were asked to assess their instructional competency in six personal finance areas: income and careers; planning and money management; credit and debt; financial responsibility and decision-making; saving and investing; and risk management and insurance.

Less than 20 percent of the surveyed educators felt they were "very competent" in any of the six areas. No wonder: Barely one-third of them had taken a college course that included personal finance content, the researchers found.

"This study reinforces the need to incorporate personal money management topics into educational opportunities for teachers, whether in undergraduate or graduate curricula for students studying to become teachers, or as postgraduate or in-service courses or workshops," says Ted Beck, president and chief executive of NEFE. "We have an opportunity to dramatically affect the quality of K-12 financial education by providing teachers with the subject matter expertise they need throughout their careers."

Increasingly, states are pushing economic education. The number of states that require students to take a personal finance course, or instruction as part of an economics class, increased to 13 in 2009 from seven in 2007, according to the Council for Economic Education. Although states are setting up financial education guidelines, an overwhelming majority of teachers who participated in the NEFE survey said they didn't feel qualified to offer instruction at the level of the standard set by their states, the researchers said.

The survey is being used to show that if we teach the teachers, we have a better chance of educating our children about personal finance.

This is a worthy goal. It's vital that we teach children to be better stewards of their money. If we do, they will become better money managers as adults.

In fact, I agree with many financial literacy advocates that a core part of any curriculum for grades K-12 should include mandatory financial literacy classes. And you didn't misread that. I do mean from kindergarten to 12th grade. A 5-year-old who can beg for a Happy Meal at McDonald's and then whine and cry when he doesn't get one is more than ready to be schooled in the economics of eating out.

College students shouldn't be handed a degree without having taken personal finance classes -- and yes, they should take more than one. For example, graduates should know how to create a budget based on their expected salary.

Because of the recession, we have a keener understanding that many folks lack the decision making training to make good financial choices. We may not be able to teach people common sense, but we can do a better job of teaching basic money management, such as not spending more than 36 percent of your net monthly pay on housing.

"Teachers are pivotal to the success of financial education efforts," researchers Wendy L. Way and Karen Holden wrote in the NEFE report.

But the agenda to educate the educators and mandate that schools add money management to their basic curriculum must acknowledge that we also need to teach the people who are parenting the K-12 children.

Because parents are urged to attend school meetings, sports programs, concerts, plays and other activities, school districts could press them to sit alongside their kids for a money management session.

Parents are the only ones who can instill in their children certain core values concerning finances. In my family, it's the values component that will, for example, encourage my three kids to make tithing and charitable giving a top priority in their budgets.

And no child of mine will leave home without a healthy hatred of debt. A financial class at school might suggest there is such a thing as good debt and bad debt. No way. My children will learn from me to do everything they can to avoid borrowing, except for the purchase of a home.

If we know that children often live out what they learn at home, this is one subject we can't put entirely into educators' hands.

Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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