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Teaching money management basics sparks success

As I See It

For far too many young adults, financial literacy boils down to being able to follow directions at an ATM or fill out a credit card application.

Our schools, overwhelmed by a myriad of problems, and many parents, overwhelmed by their own mountains of consumer debt, aren’t helping kids learn the basics of good money management.

A telling example of this situation is found with the runaway number of bankruptcy filings in the U.S.

Filing bankruptcy in America has lost its stigma, and it now seems to be the first choice people consider when their financial situations get tough. It’s truly a sad testament for the citizens of the wealthiest nation on earth.

According to the JumpStart Coalition, a Washington, D.C.-based advocacy group, only 10% of youth are graduating from high school with any kind of instruction in personal finance. And the ignorance continues into college where one in 10 students owes more than $7,000 on credit cards before graduation, according to student-loan company Nellie Mae.

There are some who are committed to changing the lousy state of financial literacy in our country. Federal Reserve Chairman Alan Greenspan has been an outspoken proponent of financial-literacy education for years. Other supporters include banks like JP Morgan Chase and Wells Fargo. Credit card companies often back financial education programs, though many consider them to be part of the problem.

Additionally, Junior Achievement (JA) and the National Council for Financial Education (NCFE) are working tirelessly to promote financial education to young people. JA has been active in Mississippi since the 60’s and Mississippians will soon have benefit of the programs offered by the NCFE once the Mississippi chapter is operational.

There really are two issues that affect everyone’s personal financial management. One is knowledge and the other is desire. Some, in fact, many, people are simply ignorant of the magic of compound interest, the fallacy of buying on credit and the un-likelihood of Social Security being adequate to satisfy all retirement needs.

Aside from ignorance is the desire and commitment to live a financially prudent lifestyle. Unfortunately, that desire, which is equally as important as knowledge, seems to be missing in today’s materialistic society. It doesn’t take a rocket scientist to grasp the concept that either a person lives within, or below, their means, or they don’t. One choice leads to a comfortable life, the other leads to despair. Whether consciously or not, all of us make that choice and that pretty much dictates what kind of lifestyle we will live.

Bright spots on the horizon

Junior Achievement (JA) programs work to teach youngsters about financial responsibility. JA provides the materials and makes the arrangements while volunteers teach the classes. These programs are conducted for grades 1-12 across many areas of Mississippi. The availability of funding curtails more widespread access to JA programs.

In addition to JA, a group of concerned Mississippians is currently organizing the Mississippi Council for Economic Education (MCEE). Our council will be affiliated with the National Council for Financial Education, which had a Mississippi chapter in years gone by. Teaching the teachers is the thrust of the MCEE. Teacher training will be conducted at several colleges and curriculum material will be provided to high school teachers throughout the state. School administration is being encouraged to integrate economic education into the education system.

After education, it all goes back to desire.

Through the efforts of JA, the MCEE and other groups, our youngsters are increasingly being exposed to the concepts of financial literacy. However, they are still bombarded by TV and radio commercials heralding the latest in every conceivable type of product. Resisting temptation to irresponsible consumption will be an ongoing, lifelong challenge. But, at least many of our young people will have had exposure to the basic principles of financial management. Beyond that, there’s not much more we can do.

Both Junior Achievement and the Mississippi Council for Economic Education operate entirely on donations. Their affiliation with national organizations provides many things; however, money is not one of those things. Please keep this in mind when volunteers come calling for donations of money and volunteer time. It’s hard to imagine a more worthwhile cause than arming our young people with the tools to live a happy, productive life in our free enterprise system.

Thought for the Moment — In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.

— Proverbs 21:20

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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