HIGH SCHOOL FINANCIAL PLANNING

Today’s working high school and college students have more disposable income than those of any previous generation, and are spending it more freely. All too often, spending exceeds income, and the harsh reality of adulthood arrives early.

Recognizing that young adults generally are ill prepared to handle finances responsibly, extension educators at the UI College of Agricultural and Life Sciences looked for a program to address the deficiency.

They turned to the National Endowment for Financial Education (NEFE), a private entity based in Colorado that focuses on financial education for youths. Using a revised curriculum introduced last summer, the program strives to help schools meet new standards for economics education in Idaho.

It’s All About Personal Finance has been integrated into the state’s 4-H program and includes at least 10 hours of formal instruction. But educators who recognize the value of the well-conceived curriculum can integrate it into a semester-long economics course or extend it to a full year if they use the practical, experiential components.

The program is available at no cost from the non-profit organization.

The NEFE student guide includes units on financial planning, career choice, budgeting, savings and investments, credit, and insurance. Each unit includes an overview, basic instruction, visual and participatory aides, and action steps. It also includes all of the related teaching resources and a final exam.

Students learn the value of “paying yourself first” and establishing a consistent savings plan, the role that investing and the stock market play in a personal financial plan, the smothering effects of debt and the importance of a good credit rating, the pitfalls of bankruptcy, and the cost of personal and auto insurance.

While the program is comprehensive, it alone will not meet all of the state’s standards for economics education, explains Marilyn Bischoff, extension family economics specialist at the UI Boise Center.

A one-semester consumer economics class was mandated as a graduation requirement for Idaho high school students in 1994. Curriculum guidelines for the class were established last year as part of the state’s achievement standards.

“The goal is to help high school students gain financial management skills that they will be able to use throughout their lifetime,” explains Bischoff. “The thing that I love about this program is that it is so comprehensive and includes nearly all of the concepts on personal finance.”

The need for more comprehensive education in economics and finance is clear. Research shows:

• 58 percent of American high school students learn most of what they know about money management from their parents, and fewer than 11 percent learn more in school.
• The average American teenager spends approximately $4,370 each year and, collectively, teenagers spend more than $155 billion annually.
• Today’s high school graduate stands to earn more than $1 million in adulthood —without adjusting for inflation.
• Less than one-half of the students surveyed know that if their income doubles from $12,000 to $24,000, their taxes will at least double.
• Only 32 percent know they might have to pay income tax on savings account interest.
• 62 percent think they will have no liability for some charges on a credit card stolen from them. The new educational program received immediate acceptance when introduced on a limited basis last year through UI Extension. Bischoff hopes to expand it in the coming year by presenting it to Idaho teachers at an annual conference August 8-9 in Meridian. Part of a national curriculum, NEFE’s financial planning program has a long and successful track record. A random survey of students who completed the NEFE High School Financial Planning Program nationwide revealed vastly improved knowledge about economics.
• 47 percent know more about the costs of credit.
• 38 percent improved their knowledge about investments.
• 38 percent felt more confident about managing their money.
• 37 percent improved their skills for tracking their spending.
• 29 percent started a savings plan, and
• 15 percent who had been saving, committed to increasing their saving level.

Closer to home, Idaho students already recognize the value of an education in finances.

“I’ve been able to save the money to pay off over $305 in high school senior bills,” said a Kellogg student. “If I hadn’t had this program, I wouldn’t be able to receive my high school diploma.”

A student from Rigby added, “The most important thing I’ve done with my money is to save it. I’ve always saved my money in the past, but now I understand how vital it is to have some money in your name, even if I’m only a teenager. I’m glad I don’t waste money anymore, and this program helped me see my priorities.”

Teachers, 4-H leaders, or parents who want more information on the NEFE curriculum may contact Bischoff at the University of Idaho’s Boise Center, 800 Park Blvd., Suite 200, Boise, ID 83712, or call her at 208-364-9910. Her email address is mbischof@uidaho.edu.

FINANCIAL LITERACY

Business leaders, educators, and professionals who share a common desire to promote a better financial understanding have united in southern Idaho, forming the economic equivalent of Habitat for Humanity. Rather than building houses for low-income families, they provide educational opportunities to help improve financial livability.

The Idaho Financial Literacy Coalition was formed in 1995 under the leadership of the University of Idaho’s Linda Fox, Beverly Healy, and Marilyn Bischoff. The latter two remain active members of the broad-based group that includes representatives of banks, credit counseling services, social agencies, nonprofit organizations, and educational institutions.

An affiliate of the National Jump Start Financial Literacy Coalition based in Washington D.C., the Idaho organization provides networking opportunities and support for financial education.

“Our mission is to increase the quality and quantity of financial management in Idaho through workshops and publications, and by sharing resources with one another so we can be more effective in what we do,” Bischoff explains.

The coalition meets monthly to share information about what the respective member organizations are doing to promote financial understanding. Among recent activities, the coalition promoted a governor’s proclamation, sponsored a legislative luncheon, and planned to participate in a teachers’ conference this summer. In response to the coalition’s efforts, Gov. Dirk Kempthorne proclaimed February 2002 to be Financial Literacy Month. That proclamation acknowledged that:

• Idaho bankruptcy filings set a record in 2001 with an increase of nearly 15 percent over the previous year.
• Research shows a direct relationship between financial literacy and the rates of personal bankruptcy.
• Idaho has the ninth-highest proportion of households in the nation filing for personal bankruptcy.
• 78 percent of all college undergraduates have at least one credit card and 10 percent of those have balances of more than $7,000.
• Only 46 percent of the respondents in a national survey indicated they had calculated their income needs in retirement.

Gov. Kempthorne’s proclamation also credited increased financial knowledge with contributing to personal financial stability and the financial and economic health of Idaho and its citizens.

The literacy coalition recently endorsed a new project that will help newlyweds and newly engaged couples begin planning their family finances. The program will include four to five sessions on financial management, budgeting, communicating value systems, and other financial issues.

Coalition members plan to begin using the curriculum this fall in Boise and would like to see it grow beyond southwestern Idaho. Likewise, they hope the coalition will expand to other parts of the state to provide even greater networking and coordination among financial education programs.

The coalition has more than 30 active members, all of whom pay dues that support the group’s initiatives. As needs are defined, working committees are formed to recommend strategies.

Tim Barrett, director of Consumer Credit Counseling in Boise, serves as president. Other leaders include vice president Patty Highley, Idaho Department of Finance; secretary Sonja Kidney, a program coordinator for the Better Business Bureau in Boise; and treasurer Cindy Williams, a community reinvestment officer with US Bank.

FINANCIAL SECURITY

A new program offered through the UI’s College of Agricultural and Life Sciences contains a wealth of information that appears ideally suited for senior citizens or those on the threshold of retirement.

As with insurance policies, however, Financial Security in Later Life is a planning tool designed to be implemented long before the shadows of golden years grow long. Employed during middle age, or even early adulthood, the principles contained in the educational program can lead to freedom from financial worries that plague many senior citizens today.

“It is designed to help older people to become financially secure in retirement so they won’t have to over-rely on government services, and so they can pay for essentials like medicine,” explains Marilyn Bischoff, UI Extension family economics specialist in Boise.

The program was developed by the U.S. Department of Agriculture with input from state extension specialists who in turn will help introduce it through the states.

“Financial security is the ability to meet future needs while keeping pace with day-to-day obligations,” according to USDA materials. “Preparing for retirement and potential long-term care costs takes planning, saving, and debt control.”

The goals of the program are to:

• Make responsibility for later life financial security a priority for individuals.
• Enhance the capacity of local educators and their partners to deliver effective programs.
• Increase economic vitality and quality of life for families and communities.
• Participants will be capable of planning for “a long and vital life,” act on their chosen plan, and evaluate the plan as changes are needed in order to achieve financial security, for themselves and for others.

Specifically, participation should lead to reduced debt, increased savings and investment plans, and increased self-confidence with financial decisions.

One of the program’s strongest attributes will be the partnerships that emerge in local communities. Financial Security in Later Life will draw upon the expertise of professionals who work in banking and financial planning. Already, the American Association of Retired Persons has joined the initiative as a way of smoothing the transition for the next wave of retirees.

AARP’s largest audience is adults in their 30s and older — or pre-seniors, as Bischoff describes them. They will enter retirement with inherited wealth or earned wealth. And unless they begin planning in advance, their nest egg could disappear by the time they retire. “They still have time to make some changes,” she adds.

The program will also benefit women, minorities, immigrants, and self-employed individuals facing a retirement income cap, farm families, individuals working in agriculture-related businesses and employees of small businesses, and persons with limited resources.

The educational program has five parts, three available now and two in the design process. It will be implemented in stages, probably starting with sessions on savings plans and a “legal checkup.” Others will focus on long-term care (how to select and pay for independent or assisted care options), investing, and retirement planning.

The initiative comes without a government allocation, so funding the curriculum and its delivery will depend on local efforts. Bischoff hopes sessions will revolve around professionals who teach concepts without promoting specific services or products.

They will have at their disposal educational strategies, research summaries, marketing tools, funding suggestions, evaluation guidelines, and ideas for developing local partnerships.

Bischoff hopes to begin forming broad-based community coalitions throughout the state in the near future, with assistance from other extension educators.

© 2002 University of Idaho, College of Agricultural and Life Sciences.