I happened to enjoy some extra reading time last week because Snowmaggeddon 2014 kept most of Atlanta captive to their homes. I ran across this article from Time Business and Money that talked about the plight of Americans and their money. In it, they cite the Assets and Opportunity Scorecard report from the Center for Enterprise Development. This report found 44% of Americans were living under “persistent economic insecurity that makes it difficult to look beyond immediate needs and plan for a more secure future.”
According to the article, this segment of the population has less than $5,887 in savings for a family of four. With credit scores also shot from the latest recession and housing crisis, they feel their only alternative to manage through emergencies is to resort to high interest credit cards or payday loans. As those of us deeply focused on personal finance know, these types of programs only serve to bring further damage to the individual’s financial state.
Being an investigative personal finance blogger, I decided to look up the full CFED report and find where my home state of Georgia ranked. A couple of clicks and…uh-oh…that doesn’t look good. However, the results showed an even more alarming trend as it relates to the entire U.S. South. Here are the ranks for states 42-51 on the list (District of Columbia included):
42. New Mexico
44. Louisiana (tie)
44. Tennessee (tie)
46. North Carolina
47. South Carolina
Notice any trends on that list? Pretty disturbing. Basically, the average Southerner is living paycheck to paycheck at best, with little clue how to manage their money.
What’s Going On Here?
So many economic and societal issues could impact these results, so it’s hard to know where to start. When I looked at the internals of the CFED report, however, my eyes were drawn to one segment that directly links to my chosen profession – education.
Check out some of these statistics from the report:
15% of Georgia borrowers entering repayment of their student loans default within three years
28% of adults in Georgia have at least a 4-yr college degree
70% of Georgia students entering high school in the 2007-08 school year graduated in the class of 2012
32% of Georgia 8th graders perform at or above proficient in reading
29% of Georgia 8th graders perform at or above proficient in math
59% of Georgia college students graduate with student loan debt
As you can see the education sub-report for Georgia is pretty abysmal. Based on the rankings above, my hunch is that I would find similar statistics for the other Southern states. Needless to say, we have some serious issues with our overall educational system. (To check out your state click here. Select state, then choose “Click to Select Front Page Statistics.”)
This doesn’t come as a surprise as the southern states have consistently ranked near the bottom for overall quality of education. In fact, all the states in the aforementioned list received a C+ or lower in educational policy and performance as ranked by Education Week in their annual state report card.
Is There a Linkage?
Could it be these two issues – educational achievement and personal finance are linked to one another? Does one’s level of education play a role in their financial success? While I can’t draw any absolute conclusions (like saying “If you are smart, then you will be rich”), the evidence from these two reports seems to gel together quite nicely.
The easy path here is to fault families for not teaching their kids about personal finance. If, however, families are in such dire straits as the CFED report mentioned, they are not knowledgeable enough to handle their own lives, let alone teach their children about personal finance. Based on that, it would seem the effort to turn the tide among that illiterate segment of the population has to start somewhere else…in the school system.
School represents the best place to catch young people and raise their level of financial literacy. They are required by law to attend so we have them captive for 7+ hours per day. Can’t one of those hours be devoted to some form of economics or personal finance curriculum during the four years they attend?
My experience as a personal finance teacher shows students will eat it up. Students love to talk about money and how it impacts their lives. It’s almost as simple as walking into a classroom and asking, “Does anyone want to be rich?” or saying “This is the most important class you will ever take. Don’t tell your science teacher.” You’ll have their attention.
Once you have their attention, it’s simply a matter of empowering them with quality content that is passionately delivered and connects with their dreams.
If these students started making wise financial decisions in their teen years, they most likely would be rich by retirement, if they follow the basics of saving and investing early and often. That pattern occurring over several generations on a broad state scale could reverse the trend seen in the economic reports. As families get financially healthier and smarter, the whole economic climate of the region could improve.
The solution is simple – educate the young to improve the future. Sure the implementation in the schools would be challenging and there are tough societal conditions to overcome. But what do we have to lose?
Nothing in my mind because one things for sure…right now, the South just ain’t gettin’ personal finance.
Where did your home state rank in the report? Who is more responsible for teaching financial literacy – the home or the school system? What other ways can the school system and families work together to improve children’s financial literacy?