April 13, 2009

If there is one thing these difficult economic times have taught us, it is an important lesson about the value of financial literacy.   Complex financial decisions play a greater part in adult life than they have been in the past.  It is our moral responsibility to prepare our youth for their adult life, and in these times, that includes basic principles of finance.  That’s why I am sponsoring SB 317, legislation which would require Nevada schools to educate our youth on the basics of navigating the financial system, including managing a mortgage, understanding credit principles, and balancing personal budgets. Senate Bill 317 also provides that a pupil must demonstrate satisfactory completion of the instruction in financial literacy by passing an exam before receiving a diploma.

The Council further concluded that, by almost any measure, today’s schoolchildren are ill-equipped by our education system to understand personal finance and make their way in the modern financial world. Research shows that teens and young adults, including college students, do not know enough about personal finance.  Their rising debt and debt problems, along with little inclination to save are thought to contribute to poor performance among teenagers taking the Survey of Financial Literacy.  The results were shocking. Of those taking the survey, participants got an average of only 48.3% of the test questions correct—a failing grade.

Among the results of the test:

•           Only 51% knew how to write a check;

•           Only 34% could balance a checkbook;

•           Just 26% knew how credit card fees worked; and

•           Only 24% knew whether a check-cashing service is a good thing or a bad thing to use.

Another national organization, the JumpStart Coalition for Personal Financial Literacy, determined that the average student who graduates from high school lacks the basic skills in the management of personal financial affairs. The organization also concluded that most students were unable to balance a checkbook and most have no insight into the basic survival skills involved with earning, spending, saving and investing.

The JumpStart Coalition further stated that many young people fail in the management of their first consumer credit experience, establish bad financial management habits, and stumble through their lives learning by trial and error.

To avoid another crisis, we need to make sure Nevadans do not once again fall prey to deceptive finance practices, and the best place is to start with our youth.  We have the opportunity to make a difference for future generations by providing them with the basic skills for the future.