Schools Play Financial Literacy Catch-Up

BOSTON ( TheStreet) -- In his recent State of the Union address, President Barack Obama spoke of seeing a "Sputnik moment" for the nation's education system and the need to better prepare students with skills in math and science.

On the heels of the Great Recession, one might consider adding financial literacy to the list of skills students lack.

There have been improvements in how financial literacy is taught in schools, experts say, but few states require it to be taught at all.

Over the decades, money management lessons for kids have rarely ventured far beyond the "always count your change" variety of advice sandwiched between Saturday morning cartoons. (Sometimes the advice comes from a more interesting source. Here's a look at 8 Money Lessons From Dr. Seuss.) Given the increasingly complex world of modern personal finance, a new push is under way to ensure youth are ready for the challenge.

"We've made some strides in the past few year, but we have a long way to go," says Laura Levine, executive director of the Jump$tart Coalition for Personal Financial Literacy. "We kind of started from nowhere, so we've made tremendous strides. But we are not even close to calling it a day. We're just starting. There's a lot more that needs to be done both in terms of the quantity and quality of financial education."

The nonprofit, based in Washington, D.C., is a partnership of about 150 organizations, government agencies, academic institutions and corporations including American Express ( AXP), the JPMorgan Chase ( JPM) Foundation, Bank of America ( BAC), Morgan Stanley ( MS), Visa ( V), Citi ( C) and Wells Fargo ( WFC).

At its site, Jump$tart features an interactive map that breaks down which states have formalized financial literacy programs in place for their school systems. Among the notable exceptions are California, Washington, Oregon, New Mexico and Florida.

The Council for Economic Education, a six-decades-old advocacy group for financial education in K-12 schools, issues a periodic assessment of state-by-state performance on that front. Its most recent report, covering all of 2009, found that the number of states requiring students to take an economics course as a high school graduation requirement increased from 17 in 2007 to 21 in 2009. Only 19 states require the testing of student knowledge in economics, though, four fewer than in 2007.

The states requiring students to take a personal finance course (or learn personal finance as part of an economics course) as a high school graduation requirement increased from seven in 2007 to 13 in 2009. Five states require entrepreneurship to be included as a component of a high school course -- usually economics -- for graduation, up from three in 2007.

Christopher Caltabiano, vice president for program administration for the council, says there have been improvements in how financial literacy is taught in schools, and research indicating that "student learning does improve as they're being taught content by teachers who actually have received training in it."

Nevertheless, there are challenges to implementing this curriculum.

"I think a big hurdle is just having a very crowded curriculum and one that, for reasons such as No Child Left Behind, is very focused on math and language arts," he says. "Many other important parts of the curriculum get crowded out when success relies on students performing in those two subject areas."

"It is not the idea of financial literacy that is a hard sell, but rather how you then fit it into the school day and within school resources," Levine says. "School budgets have been hit very hard. If you don't already have a financial education program you may think it's a great idea, but if you are just scraping the barrel to come up with funds for anything it is hard to say, 'Sure, we'll train the teachers and buy the materials.'"

Another obstacle, she says, is that "financial education does not have a singular home in the education system."

"We know that algebra is taught in the math department, literature in the English department," she says. "The challenge is that there is not a real ownership of personal finance . Schools don't have a financial education department. Who owns it? We don't really know."

The independent nature of school districts is another issue.

"Education requirements are set at either the state or local level," Levine says. "There are very few federal education requirements. You are not just convincing one school, you have to convince the entire state and do this many times over."

Caltabiano stesses the importance of starting the process while students are young.

"All through your elementary school career you are getting pieces of history, so by the time you get to a standalone course in high school you've already got a background," he says. "You aren't walking into a class where you don't have a basic understanding, then lift-off. If we wait for high school, we've waited too long. Kids are not going to have that foundation and context that they need."

Online resources can supplement the teacher-student relationship, Caltabiano says. His own organization has an online personal finance game, Gen I Revolution, that has proven popular.

"At the end of the day, you have to make this stuff interesting to kids," he says. "The way to do that is to meet them where they are -- and that's the online world they are living in more hours of the day than a lot of adults would care to think."

There are numerous efforts, private and public, that aim to drive home important financial lessons to children and their teachers.

U.S. Bank ( USB) has partnered with Build-A-Bear Workshop ( BBW) through its online, virtual town of Bearville to teach kids the fundamentals of banking. Kids can play with "Bear Bills," deposit and withdraw them via virtual ATMs, learn how to count change and even earn make-believe interest with a certificate of deposit.

The Securities and Exchange Commission has launched training workshops to help classroom teachers and other educators increase their knowledge of the capital markets and develop ways to enhance the financial education programs in their schools.

Kids.gov, a government site, features games and tools designed to teach children about saving, spending and earning money.

Among the links offered are AdMongo, which focuses on the influence of advertising; Start Smart, a money management guide for teens; Talking to Your Kids About Money, a guide for parents on how to provide a positive role model when it comes to money management; and You Are Here, a kid's site (paired with a teachers' section) that uses a virtual mall to address consumer issues.

Levine is excited by the prospects of an initiative Jump$tart is undertaking with several partners, including Junior Achievement, in the University of Arizona's Family Economics & Financial Education program: developing a standardized teacher training model for personal finance that schools can use.

"We've been trying to get everyone rolling in the same direction, and this is one of the things to try to overcome some of those hurdles," she says.

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

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