Lack of economic education a threat to young adults

This threat is not nearly as loud or visible as a car crash, but it’s real and it can rob young adults of their dreams and aspirations.

The issue is financial literacy.  April is Financial Literacy Month and State Farm representatives traveled to Capitol Hill to learn what educators, Congress and other businesses are doing to find solutions that build financial literacy.  

• Each year, young Americans spend roughly $150 billion. Research shows they don’t have a good understanding of basic financial concepts such as annual percentage rates, inflation or calculating simple interest.
  
  
• On average, students answered just 52.4 percent of questions correctly on the Jump$tart Coalition’s 2006 Survey on Financial Literacy. That’s up slightly from 52.3 percent in 2004, but is still a failing grade.
  
  
• Struggles with financial literacy are not limited to high school students. According to the Department of Education’s National Center for Education Statistics, more students who dropped out of college cited financial reasons, rather than academic ones, for their decision.

In 2006, State Farm contributed more than $1.3 million dollars to financial literacy programs and, in 2007; we'll contribute nearly $2 million. Company programs target the issue of financial literacy in different ways – from grassroots efforts led by youth, to training for teachers, to training kits parents can use at home. 

Building knowledge through youth

We’re giving youth the means to make a difference in the world.

In February, State Farm’s Youth Advisory Board awarded $533,000 to 11 organizations for projects focusing on financial education.

Examples include:
The Annapolis Maryland Boys and Girls Club will direct a financial education program that involves direct participation.  Students will run an In-Club store where T-shirts, school supplies and other items will be sold.  Students will make decisions about what to order based on supply and demand and cash-flow.  Students will also create a presentation which they will show at schools, clubs, and organizations in the area highlighting what they have learned.

The Chicago Urban League (CUL) called the Investor/Entrepreneur Project (YIEP). The program will offer financial literacy courses to an additional 200 participants (per fiscal year) including 50 more teens and 150 adult constituents (including parents of YIEP students) in the general low-income community. To learn more visit the State Farm® Youth Advisory board.

In addition, State Farm is providing $2,500 Good Decision Credit Awareness Service-Learning grants to a school or community-based organization to set up hands-on problem solving activities that promote understanding of credit and credit cards. “Service-learning” is a teaching method that involves the students in solving problems within their schools and communities as part of their academic studies.  Up to 20 schools can qualify for the grants. To learn more visit the National Service-Learning Partnership.

Teaching Teachers

Robert Duvall, President and CEO of NCEE believes the best way to make a lasting difference in the lives of young people is to teach teachers how to make economics and personal financial decision-making skills come alive in the classroom.  State Farm agrees with that philosophy.   Early this year, State Farm and NCEE began a new national initiative to improve the economic and financial literacy of the nation’s youth. Mississippi leads this initiative as the first state in the nation to train a majority of its Kindergarten through 12th grade social studies teachers to use  Virtual Economics® 3.0 (VE).  VE (developed by NCEE and funded by State Farm) is an interactive tool that helps K-12 teachers understand and integrate the most important concepts in economics and personal finance into classrooms at every grade level. 

Economic and financial literacy is a front-page issue. “Our nation’s young people stand to inherit a complex and rapidly changing economy and yet too many are unprepared for the challenges ahead,” said Duvall. “How can we talk meaningfully about an ‘ownership society’ and the good old-fashioned American virtues of self-reliance and individual responsibility if people don’t have a basic framework for making sound economic and financial decisions in their lives?”

This multi-year effort combines professional development for teachers and advocacy efforts for greater emphasis on economics education and financial literacy in K-12 education nationwide. Over the course of the three-year initiative, the NCEE will offer professional development for more than 14,000 K-12 teachers in seven states: Arizona, California, Florida, Georgia, Illinois, Mississippi and Texas. These teachers will reach more than 1.2 million students annually. In Mississippi alone, more than 6,000 teachers will receive training and reach more than 400,000 students annually.