Bridge To Impact recently completed a client project researching effective financial literacy programs that promote healthy financial management practices among low-income youth. The work relates to the mission of our client, a college-access focused foundation, around increasing the number of disadvantaged youth who are accessing and persisting through college until they have that degree in hand. It’s a logical, two-part idea: 1) Low-income youth can attend college if they can afford it. 2) Low-income youth can afford college if they can manage money (including financial aid, scholarships, loans, grants) well. The #1 reason why students are dropping out of college is due to financial struggles. So how do we get these students to better manage their money leading up to and through college?
Financial literacy and financial education are not new news. They’ve been researched, they’ve been taught, they’ve been innovated and they’ve been copied and pasted. Many of us remember the days of “Home Ec” classes in middle- or high-school; these classes have been all but been discontinued in public schools. They started to receive a bad rap from women’s equality groups as the curriculum leaned more and more towards sewing and cooking. But historically, these classes were much more about true home economics, including counseling on budgeting, saving, and making the most out of limited resources. What happened to home ec?
The better question might be: how are our nation’s youth learning about effective personal financial management practices? The answer is troublesome, because it is typically that, they’re not.
We’ve figured out other ways to teach personal finance in high schools, without the negative association of home economics. It can be integrated into curriculum, it can be taught during economics or history, it can be offered through one-on-one advising from a counselor or a volunteer from a local bank. The field is now taking a tech-savvy approach and partnering folks like Khan Academy with financial institutions to develop more engaging lessons, creating interactive NFL-themed games, and even using 3D gaming and avatars.
No matter the extent of our savvy, two key challenges remain: 1) Outcomes of these practices are rarely evaluated, and when they are, the link between financial education and better financial behaviors is sometimes weak. We need more research on the most promising practices. 2) Only a third of states require personal finance in K – 12 education. Efforts are often piecemeal and fragmented, and states such as California find difficulty in uniting efforts to agree on statewide realistic goals for improving our youth’s financial literacy and health.
As we continue to wrap our minds around the best ways to help low-income youth escape the cycle of poverty, it’s time to get the needle moving again on personal finance education. Whether it’s Home Ec or Financial Football, we have a responsibility to fulfill in getting youth financially ready for college, for careers, and for life.