The value of financial literacy
Financial literacy is integral to everyday life. Learning how to balance a budget, pay bills and save for retirement are important financial matters every American must understand. One of the best ways to establish control over finances is by improving financial literacy.
Credit, debt management and financial knowledge are the major components of financial literacy. According to research by the Milken Institute, only 57% of Americans are financially literate.
Financial education is the most effective way to bridge the gap, increasing the number of people who encompass the knowledge and tools to manage their finances.
Most experts agree that starting at a young age can increase financial literacy exponentially. In Butler County, young people have plenty of opportunities to become financially literate through programs offered by schools and financial institutions.
In the Seneca Valley School District, juniors and seniors at the high school can enroll in a personal finance class designed to give them the knowledge, skills and confidence to take charge of their financial futures. Maria Brooks, SV Academy of Choice and personal finance teacher, leads the class.
All personal finance courses at Seneca Valley High School are offered as math electives, Brooks said. There are two courses — Personal Finance 1 and Personal Finance 2 — each worth a half-credit. The courses have been available in some form since the late 1990s.
A few of the topics discussed in Personal Finance 1 include financial planning, budgeting, Free Application for Federal Student Aid (FAFSA), understanding credit, and taxes.
“Personal Finance 2 dives deeper into buying a home, insurance, investing, consumer credit, and consumer debt,” Brooks said.
Students enrolled in the Blended Personal Finance 2 course participate through a virtual program that includes two in-person meetings each week. They can participate in a 10-week budget challenge game in the spring that focuses on managing an online checking/savings account. “Students taking either course participate in the stock market game sponsored by the Council for Economic Education at Butler County Community College,” Brooks said. The stock market game follows the market for 10 weeks, allowing students to learn about and practice making investment decisions while trading on the market.
Brooks said the course is popular among students because it includes topics relevant to current decisions students are making for their futures. “Students hear differing opinions and ideas from their peers while forming opinions of what will work best for them in the future,” she said. “In addition to money management strategies and assessing their risk tolerance, students realize the benefits of long-term investing and how compound interest can benefit them.”
David Huseman, director of BC3’s Council for Economic Education, said the council offers free training to teachers who are offering the stock market game to their students. Students form investment teams and are given a hypothetical $100,000 to invest over 10 weeks. The exercise is offered during the fall and spring semesters.
Students who participate in the game not only learn about investment strategies, but they also develop critical-thinking skills and the ability to work in teams, Huseman said.
BC3 also is partnering with the Butler Area School District to provide an early college pioneers program for high school seniors. Juli Louttit, BC3’s director of financial aid, is teaching the classes offered through the program. Several courses are available in the fall and spring that can be transferred toward college credit, Louttit said.
The course she is teaching this spring is called financial literacy, using the book “The Missing Semester” by Gene Natali and Matt Kabala. Some of the information presented in the course includes:
• Financial choices have consequences.
• Understanding debt.
“It is a lot of useful information, and what I appreciate most about the book for the students is the focus of starting these smart financial decisions — including saving — at a young age,” Louttit said. “You don’t realize how much (students) don’t know about simple finances or what gets missed until you watch them take it all in, engage with questions and learn from it. It would be nice to see this course required at the high school level.”
A total of 442 teams with 1,520 students participated in the fall event, Huseman said. The advantage of running the program through BC3 is they can handle teacher training and any problems students experience with registering or buying stocks. “At the end of the year, all schools are recognized by having a Stock Market Game banquet where they receive rewards and prizes for their performance during the year,” he said.
Another option for children and adolescents to gain financial literacy can be found at Armco Credit Union through the Banzai Bonus Program. Geared toward children ages 8-17, the program provides fun scenarios in which young learners can gain age-appropriate financial knowledge.
• Banzai Junior is for ages 8-12 and features a fictional lemonade stand as the central learning component.
• Banzai Teen is for ages 13-15 and navigates participants through several real-life scenarios to teach budgeting and financial management.
• Banzai Plus is for ages 16-17 and teaches participants how to budget and build credit.
Students who complete these financial literacy courses can earn $50 Armco bucks for every course they pass, said Armco marketing manager Michele Jurysta. “We wanted the kids to walk away with something at the end of the day,” she said. “Financial education is one of our main initiatives at the credit union, and not just for kids.”
Since the program launched in 2020, it has awarded nearly $30,000 to children and adolescents who completed the program, Jurysta said.
This article originally appeared in the December edition of Butler County Business Matters.
