The Minnesota Personal Finance Decathlon State Championship for high school teams was held at the Federal Reserve Bank of Minneapolis on April 6.
I was one of the judges for the part of that day's competition when the teams gave detailed personal finance recommendations on how members of a fictional family could achieve their goals while balancing their budget. I was impressed at the knowledge of the students and their poise.
Financial literacy initiatives should be applauded. Problem is, we need to do much more to build the basics of personal finance deeper into the high school curriculum in Minnesota and nationwide. Despite notable progress, "millions of Americans don't understand the fundamentals of how to manage their finances, including credit," writes Deborah Wright, senior fellow at the Ford Foundation and a former community banker.
The benefits of financial literacy are obvious. College is increasingly expensive and the student loan system Byzantine to navigate. Americans are now expected to manage their own retirement savings portfolios. Borrowing is all too easy even as lenders mask the true cost of credit.
The experience of Maria is all too common. We met the 29-year-old single mother of four several years ago in Memphis while working on an American RadioWorks documentary. Maria left home at age 19 and she wasn't careful about the debts she took on. She was working as a customer service rep making $10 an hour and she owed an amount equal to her annual wages, mostly for some student loans, back rent and costly furniture rental store payments. With creditors hounding her for payment, she was filing for personal bankruptcy to get a fresh start.
An aspect of financial literacy that isn't emphasized enough is how the movement is part of an effort to connect low-income families to the products and services of mainstream society. To escape poverty, young adults need to both steer clear of predatory lenders and build up household assets. Young adults shouldn't be trapped by hefty debt payments just when they're launching their careers.
If you have children, remember to teach them the basics of personal finance. The bedrock ideas for young people to learn are to save, to invest in their education and to borrow warily (understanding the total cost of borrowing and not just the monthly tab). Turning the fundamentals of personal finance into everyday habits pays off over a lifetime.
Christopher Farrell is senior economics contributor for "Marketplace" and a commentator for Minnesota Public Radio.
